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The  Federal  Estate  Tax 
Law  and  Regulations 

jji  (United  States  Inheritance  Tax) 


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jiiilill: 


Act  of  September  8, 1916 
Amended  March  3,  1917 


••••ill 

Guaranty  Trust  Company 
of  New  York 


The  Federal  Estate  Tax 
Law  and  Regulations 

( United  States  Inheritance  Tojc) 


Act  of  September  8,  1916 
Amended  March  3,  1917 


Guaranty  Trust  Company  of  New  York 

140  Broadway 

FIFTH  AVE.   OFFICE  PARIS     OFFICE  LONDON    OFFICE 

Fifth  Ave.  &  43rd  Street  Rue  dee  Italiens,  1  &  3  32  Lombard  St. ,  E.  C. 

(Opens  about  June,  1917) 


COPYRIGHT,    1917 
BY   GUARANTY  TRUST   COMPANY  OF  NEW   YORK 


FOREWORD 

rpHE  Federal  Estate  Tax  Law  of  Septem- 
^  ber  8,  1916,  was  amended  by  the  Act  of 
March  3,  1917.  This  Amendment  aflfects 
only  the  rate  of  tax  on  estates  of  decedents 
dying  on  or  after  March  3, 1917. 

The  net  estate  of  every  resident  decedent  Estates 
and  the  net  estate  situated  within  the  United  Tax 
States  of  every  nonresident  decedent  dying 
on  or  after  September  9,  1916,  is  subject  to 
the  provisions  of  the  Federal  Estate  Tax  Law 
and  liable  for  the  payment  of  the  tax  thereby 
imposed. 

The  rate  of  tax  varies  according  to  the  Rate  of  Tax 
amount  of  the  net  estate  and  increases  pro- 
gressively from  1%  on  estates  of  $50,000,  to 
10%  on  estates  in  excess  of  $5,000,000  of  de- 
cedents dying  prior  to  March  3,  1917,  and 
from  13^%  on  estates  of  $50,000  to  15%  on 
estates  in  excess  of  $5,000,000  of  decedents 
dying  on  or  after  March  3,  1917. 

The  following  tables  show  the  rate  of  tax, 
the  amount  of  net  estate,  and  the  amount  for 
which  the  estate  is  liable. 

359122 


Decedents 
Dying  Prior 
to  March  3, 
1917 


Decedents 
Dying  on  or 
after  March 
3,  1917 


Assessment 
Based  on 
Net  Estate 


Net  Estate 


(1)   Estates  of 

March  3, 1917: 
1%  on  first 
next 


3% 
4% 
5% 

e% 

8% 

9% 

10% 


decedents  dying  yrioT  to 


$500 

2,000 

3,000 

8,000 

27,500 

60,000 

70,000 

80,000 

90,000 


>,000  = 

100,000  = 

100,000  = 

"         200,000  = 

"         550,000  = 

"      1,000,000  = 

"      1,000,000  = 

"      1,000,000  = 

"      1,000,000  = 

all  amounts  in 

excess  of  $5,000,000 

(2)  Estates  of  decedents  dying  on  or  after 

March  3, 1917: 

1|%  on  first        $50,000  =  ^$750 

100,000=  3,000 

100,000  =  4,500 

200,000  =  12,000 

550,000  =  41,250 

1,000,000  =  90,000 

1,000,000=  105,000 

1,000,000=  120,000 

1,000,000=  135,000 

15%  on  all  amounts  in 

excess  of  $5,000,000 

The  figures  given  above  are  based  upon  a 
net  estate;  that  is,  an  estate  from  which  there 
have  been  deducted  the  allowable  deductions 
and,  in  the  case  of  an  estate  of  a  resident  de- 
cedent, the  specific  exemption  of  $50,000. 

Net  estate  subject  to  tax  is  determined  by 
deducting  certain  items  from  the  gross  es- 
tate of  the  decedent. 


3% 
4i% 
6% 
71% 
9% 
10i% 
12% 

131% 


next 
u 

u 

u 

a 

u 

u 

u 


The  gross  estate,  as  defined  by  the  statute,  ^^^^^  Estate 
includes: 

1.  All  properfy,  real  or  personal,  tangible  Property  in 

.  .         .  «      1        Charge  of 

or  intangible,  coming  into  the  hands  of  the  Executor 
executor  or  other  in  charge  of  the  estate, 
which  property  would  be  subject  to  charges 
against  the  estate,  expenses  of   administra- 
tion, and  distribution  to  the  heirs  or  legatees ; 

2.  Property  transferred  without  valuable  Transfers 

-^^       *^    ^  ^  m  Contem- 

consideration    in    contemplation    of    or    in-  plationof 
tended  to  take  effect  at  or  after  death; 

3.  Decedent's  share  in  money  or  property   Interests 
owned  by  decedent  jointly  with  another  or  orlnEntSety 
with  others  in  entirety,  unless  it  can  be  shown 

that  such  interest  was  never  owned  by  the 
decedent. 

In  determining  the  net  estate  of  resident  Deductions, 
decedents  the  following  deductions  from  gross  Decedents 
estate  are  allowed: 

Funeral  expenses. 

Administration  expenses. 

Claims  against  the  estate. 

Unpaid  mortgages. 

Lossesjiot  compensated  by  insurance. 

Support  of  dependents  during  the  settlement 
of  the  estate. 

Other  charges  allowed  by  the  laws  of  the 
jurisdiction  under  which  estate  is  adminis- 
tered. 


In  addition  to  the  above  deductions,  a 
specific  exemption  of  $50,000  is  allowed  to 
the  estates  of  resident  decedents. 

The  above  items,  except  the  specific  ex- 
emption of  $50,000,  may  also  be  deducted 
from  the  value  of  that  part  of  the  gross  estate 
of  a  nonresident  decedent  which,  at  the  time 
of  his  death,  is  situated  in  the  United  States, 
in  such  proportion  as  the  value  of  such  part 
bears  to  the  value  of  the  gross  estate,  where- 
ever  situated,  of  such  nonresident  decedent. 

For  example:  a  nonresident  dies  leav- 
ing a  total  estate  of  $200,000,  of  which 
$100,000  is  represented  by  property  in  the 
United  States.  The  total  expenses  of  the 
estate  under  the  items  enumerated  above  as 
deductions  amount  to  $20,000.  The  estate 
would,  therefore,  be  allowed  to  deduct  that 
proportion  of  $20,000,  which  $100,000,  the 
value  of  the  estate  in  the  United  States, 
bears  to  $200,000,  the  total  value  of  the  estate, 
i.e.,  one-half  of  the  total  expenses  amount- 
ing to  a  deduction  of  $10,000.  This  estate 
would  accordingly  be  taxed  on  $100,000, 
the  value  of  the  estate  in  the  United  States, 
less  $10,000,  the  total  deductions  allowed, 
i.e.,  $90,000. 


Required 


Within  thirty  days  after  qualifying  or  after  j^^^'"**^ 
coming  into  possession  of  any  property  of  a 
decedent,  an  executor  or  other  person  coming 
into  the  possession  of  an  estate  must  give 
written  notice  to  that  effect  to  the  Collector 
of  Internal  Revenue. 

A  return  of  the  estate,  on  Form  706,  as  Return 
provided  by  the  Regulations  of  the  Treasury 
Department,  must  be  made  by  the  executor 
or  other  person  coming  into  the  possession  of 
the  estate:  (1)  in  the  case  of  a  resident  de-  When 
cedent,  if  the  estate  is  subject  to  tax  or  if  the 
gross  estate  at  the  time  of  the  death  of  the 
decedent  exceeds  $60,000,  and  (2)  in  the 
case  of  the  estate  of  a  nonresident,  if  any  part 
of  the  gross  estate  is  situated  in  the  United 
States,  regardless  of  amount. 

This  return,  if  the  decedent  was  a  resident 
of  the  United  States,  shall  be  filed  with  the 
Collector  of  Internal  Revenue  for  the  dis- 
trict in  which  the  decedent  was  domiciled; 
if  the  decedent  was  a  nonresident,  it  shall  be 
filed  with  the  Collector  of  Internal  Revenue 
for  the  district  in  which  the  gross  estate  of 
the  decedent  is  situated  in  the  United  States , 
or,  if  such  estate  within  the  United  States  is 
situated  in  more  than  one  district,  it  shall  be 


filed  with  the  Collector  of  Internal  Revenue, 
at  Baltimore,  Maryland. 

Pa^ble^^^^  '^^^  ^^^  ^'^  ^^^  ^^^  ^^^^  after  decedent's 
death,  and,  except  where  a  valid  will  of  a 
testator  provides  otherwise,  must  be  paid 
from  the  principal  of  the  estate,  by  the  ex- 
ecutors or  administrators,  before  distribution 

Discount  is  made  to  beneficiaries.  A  discount  at  the 
rate  of  5%  per  annum  is  allowed  if  payment 

Penalty  for     jg  m^de  prior  to  the  time  the  tax  is  due.     If 

XNonpayment  /^ 

the  tax  is  not  paid  within  ninety  days  after  it 
is  due,  a  penalty  at  the  rate  of  10%  per  an- 
num from  the  date  of  decedent's  death  is  ad- 
ded. If,  however,  failure  to  pay  the  tax  when 
Penalty  for     [^  Jg  ^j^jg  results  from  inability  to  settle  the  es- 

JMonpayment  ^   ^ 

if  Due  to        tate  because  of  necessary  litigation  or  other  un- 

Delay  avoidable  delay,  the  penalty  will  be  assessed 

at  the  rate  of  6%  per  annum  from  the  date  of 

Lien  death.    Unpaid  taxes  are  a  lien  against  the 

estate  for  ten  years  and  may  be  recovered 

Suit  l3y  court  proceedings   to   subject  the  prop- 

erty of  the  decedent  to  sale  under  judgment 
or  decree  of  the  court. 


The 
Federal  Estate  Tax  Law 

Being  Title  II  of  "An  Act  to  increase  the  reve- 
nue, and  for  other  purposes".  Approved  Septem- 
ber 8, 1916,  as  Amended  March  3,  1917 

Title  II.— Estate  Tax 


Sec.  200.    That  when  used  in  this  title — 

The  term  "person'*  includes  partnerships,  corporations, 
and  associations; 

The  term  ''United  States"  means  only  the  States,  the 
Territories  of  Alaska  and  Hawaii,  and  the  District  of 
Columbia; 

The  term  "executor"  means  the  executor  or  adminis- 
trator of  the  decedent,  or,  if  there  is  no  executor  or  adminis- 
trator, any  person  who  takes  possession  of  any  property  of 
the  decedent;  and 

The  term  "collector"  means  the  collector  of  internal 
revenue  of  the  district  in  which  was  the  domicile  of  the 
decedent  at  the  time  of  his  death,  or,  if  there  was  no  such 
domicile  in  the  United  States,  then  the  collector  of  the 
district  in  which  is  situated  the  part  of  th€  gross  estate  of 
the  decedent  in  the  United  States,  or,  if  such  part  of 
the  gross  estate  is  situated  in  more  than  one  district,  then 
the  collector  of  internal  revenue  at  Baltimore,  Maryland. 

Sec.  201.  That  a  tax  (hereinafter  in  this  title  referred 
to  as  the  tax),  equal  to  the  following  percentages  of  the 
value  of  the  net  estate  to  be  determined  as  provided  in 
section  two  hundred  and  three,  is  hereby  imposed  upon  the 
transfer  of  the  net  estate  of  every  decedent  dying  after  the 
passage  of  this  Act  (and  prior  to  March  3,  1917),  whether 
a  resident  or  nonresident  of  the  United  States; 

One  per  centum  of  the  amount  of  such  net  estate  not  in 
excess  of  $50,000; 

Two  per  centum  of  the  iamount  by  which  such  net  estate 
exceeds  $50,000  and  does  not  exceed  $150,000; 

Three  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $150,000  and  does  not  exceed  $250,000; 

Four  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $250,000  and  does  not  exceed  $450,000; 


"Person" 

"United 
States" 


10 


FEDERAL  ESTATE  TAX  LAW 


Tax  Rates 
Decedents 
Dying  on 
or  after 
March  3,1917 


Five  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $450,000  and  does  not  exceed  $1,000,000; 

Six  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $1,000,000  and  does  not  exceed  $2,000,000; 

Seven  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $2,000,000  and  does  not  exceed  $3,000,000; 

Eight  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $3,000,000  and  does  not  exceed  $4,000,000; 

Nine  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $4,000,000  and  does  not  exceed  $5,000,000;  and 

Ten  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $5,000,000. 

Amendment  by  Act  March  3,  1917 

Sec.  201.  That  a  tax  (hereinafter  in  this  title  referred 
to  as  the  tax),  equal  to  the  following  percentages  of  the 
value  of  the  net  estate,  to  be  determined  as  provided  in 
section  two  hundred  and  three,  is  hereby  imposed  upon  the 
transfer  of  the  net  estate  of  every  decedent  d3dng  after 
the  passage  of  this  Act,  whether  a  resident  or  nonresident 
of  the  United  States: 

One  and  one-half  per  centum  of  the  amount  of  such  net 
estate  not  in  excess  of  $50,000; 

Three  per  centum  of  the  amount  by  which  such  net  es- 
tate exceeds  $50,000  and  does  not  exceed  $150,000; 

Four  and  one-half  per  centum  of  the  amount  by  which 
such  net  estate  exceeds  $150,000  and  does  not  exceed 
$250,000; 

Six  per  centum  of  the  amount  by  which  such  net  estate 
exceeds  $250,000  and  does  not  exceed  $450,000; 

Seven  and  one-half  per  centum  of  the  amount  by  which 
such  net  estate  exceeds  $450,000  and  does  not  exceed 
$1,000,000; 

Nine  per  centum  of  the  amount  by  which  such  net  es- 
tate exceeds  $1,000,000  and  does  not  exceed  $2,000,000; 

Ten  and  one-half  per  centum  of  the  amount  by  which 
such  net  estate  exceeds  $2,000,000  and  does  not  exceed 
$3,000,000; 

Twelve  per  centum  of  the  amount  by  which  such  net 
estate  exceeds  $3,000,000  and  does  not  exceed  $4,000,000; 

Thirteen  and  one-half  per  centum  of  the  amount  by 
which  such  net  estate  exceeds  $4,000,000  and  does  not  ex- 
ceed $5,000,000;  and 


FEDERAL  ESTATE  TAX  LAW 


11 


Fifteen  per  centum  of  the  amount  by  which  such  net 
estate  exceeds  $5,000,000. 

Sec.  301-  That  the  tax  on  the  transfer  of  the  net  es- 
tate of  decedents  dying  between  September  eighth,  nine- 
teen hundred  and  sixteen,  and  the  passage  of  this  Act  shall 
be  computed  at  the  rates  originally  prescribed  in  the  Act 
approved  September  eighth,  nineteen  hundred  and  sixteen. 


Property  in 
Charge  of 
Executor 


Transfers  in 
Contempla- 
tion of  Death 


Sec.  202.    That  the  value  of  the  gross  estate  of  the 
decedent  shall  be  determined  by  includSig  the  value  at  the    Gross  Estate 
time  of  his  death  of  all  property,  real  or  personal,  tangible 
or  intangible,  wherever  situated: 

(a)  To  the  extent  of  the  interest  therein  of  the  decedent 
at  the  time  of  his  death  which  after  his  death  is  subject  to 
the  payment  of  the  charges  against  his  estate  and  the 
expenses  of  its  administration  and  is  subject  to  distribution 
as  part  of  his  estate. 

(b)  To  the  extent  of  any  interest  therein  of  which  the 
decedent  has  at  any  time  made  a  transfer,  or  with  respect 
to  which  he  has  created  a  trust,  in  contemplation  of  or 
intended  to  take  effect  in  possession  or  enjoyment  at  or 
after  his  death,  except  in  case  of  a  bona  fide  sale  for  a  fair 
consideration  in  money  or  money's  worth.  Any  transfer  of 
a  material  part  of  his  property  in  the  nature  of  a  final  dis- 
position or  distribution  thereof,  made  by  the  decedent 
within  two  years  prior  to  his  death  without  such  a  con- 
sideration, shall,  unless  shown  to  the  contrary,  be  deemed 
to  have  been  made  in  contemplation  of  death  within  the 
meaning  of  this  title;  and 

(c)  To  the  extent  of  the  interest  therein  held  jointly 
or  as  tenants  in  the  entirety  by  the  decedent  and  any  other 
person,  or  deposited  in  banks  or  other  institutions  in  their 
joint  names  and  payable  to  either  or  the  survivor,  except 
such  part  thereof  as  may  be  shown  to  have  originally 
belonged  to  such  other  person  and  never  to  have  belonged 
to  the  decedent. 

For  the  purpose  of  this  title  stock  in  a  domestic  cor- 
poration owned  and  held  by  a  nonresident  decedent  shall 
be  deemed  property  within  the  United  States,  and  any 
property  of  which  the  decedent  has  made  a  transfer  or 
with  respect  to  which  he  has  created  a  trust,  within  the 
meaning  of  subdivision  (b)  of  this  section,  shall  be  deemed 


Interests 
Held  Jointly 
or  in  Entirety 


Situs  of  Prop- 
erty owned 
by  nonresi- 
dents 


12 


FEDERAL  ESTATE  TAX  LAW 


to  be  situated  in  the  United  States,  if  so  situated  either 
at  the  time  of  the  transfer  or  the  creation  of  the  trust,  or 
at  the  time  of  the  decedent's  death. 


Net  Estate 
Residents 


Deductions 
Allowed 


Exemption 


Non- 

Residents,, 
Deductions 
Allowed 


When  Tax 
Due 

Discount 
Allowed 


Penalty 


Sec.  203.  That  for  the  purpose  of  the  tax  the  value  of 
the  net  estate  shall  be  determined — 

(a)  In  the  case  of  a  resident,  by  deducting  from  the 
value  of  the  gross  estate — 

(1)  Such  amounts  for  funeral  expenses,  administration 
expenses,  claims  against  the  estate,  unpaid  mortgages, 
losses  incurred  during  the  settlement  of  the  estate  arising 
from  fires,  storms,  shipwreck,  or  other  casualty,  and  from 
theft,  when  such  losses  are  not  compensated  for  by  insur- 
ance or  otherwise,  support  during  the  settlement  of  the 
estate  of  those  dependent  upon  the  decedent,  and  such 
other  charges  against  the  estate,  as  are  allowed  by  the  laws 
of  the  jurisdiction,  whether  within  or  without  the  United 
States,  under  which  the  estate  is  being  administered;  and 

(2)  An  exemption  of  $50,000; 

(b)  In  the  case  of  a  nonresident,  by  deducting  from  the 
value  of  that  part  of  his  gross  estate  which  at  the  time  of 
his  death  is  situated  in  the  United  States  that  proportion 
of  the  deductions  specified  in  paragraph  (1)  of  subdivision 
(a)  of  this  section  which  the  value  of  such  part  bears  to  the 
value  of  his  entire  gross  estate,  wherever  situated.  But  no 
deductions  shall  be  allowed  in  the  case  of  a  nonresident 
unless  the  executor  includes  in  the  return  required  to  be 
filed  under  section  two  hundred  and  five  the  value  at  the 
time  of  his  death  of  that  part  of  the  gross  estate  of  the 
nonresident  not  situated  in  the  United  States. 

Sec.  204.  That  the  tax  shall  be  due  one  year  after  the 
decedent's  death.  If  the  tax  is  paid  before  it  is  due  a 
discount  at  the  rate  of  five  per  centum  per  annum,  cal- 
culated from  the  time  payment  is  made  to  the  date  when 
the  tax  is  due,  shall  be  deducted.  If  the  tax  is  not  paid 
within  ninety  days  after  it  is  due  interest  at  the  rate  of 
ten  per  centum  per  annum  from  the  time  of  the  decedent's 
death  shall  be  added  as  part  of  the  tax^  unless  because  of 
claims  against  the  estate,  necessary  litigation,  or  other 
unavoidable  delay  the  collector  finds  that  the  tax  can  not 
be  determined,  in  which  case  the  interest  shall  be  at  the 
rate  of  six  per  centum  per  annum  from  the  time  of  the 
decedent's  death  until  the  cause  of  such  delay  is  removed, 


FEDERAL  ESTATE  TAX  LAW 


13 


and  thereafter  at  the  rate  of  ten  per  centum  per  annum. 
Litigation  to  defeat  the  payment  of  the  tax  shall  not  be 
deemed  necessary  litigation. 

Sec.  205.  That  the  executor^  within  thirty  days  after 
qualifying  as  such,  or  after  commg  into  possession  of  any 
property  of  the  aecedent,  whichever  event  first  occurs, 
shall  give  written  notice  thereof  to  the  collector.  The 
executor,  shall  also,  at  such  times  and  in  such  manner  as 
may  be  required  by  the  regulations  made  under  this  title, 
file  with  the  collector  a  return  under  oath  in  duplicate, 
setting  forth  (a)  the  value  of  the  gross  estate  of  the  decedent 
at  the  time  of  his  death,  or,  in  case  of  a  nonresident,  of 
that  part  of  his  gross  estate  situated  in  the  United  States; 
(b)  the  deductions  allowed  under  section  two  hundred  and 
three;  (c)  the  value  of  the  net  estate  of  the  decedent  as 
defined  in  section  two  hundred  and  three;  and  (d)  the 
tax  paid  or  payable  thereon;  or  such  part  of  such  informa- 
tion as  may  at  the  time  be  ascertainable  and  such  sup- 
plemental data  as  may  be  necessary  to  establish  the  correct 
tax. 

Return  shall  be  made  in  all  cases  of  estates  subject  to 
the  tax  or  where  the  gross  estate  at  the  death  of  the 
decedent  exceeds  $60,000,  and  in  the  case  of  the  estate  of 
every  nonresident  any  part  of  whose  gross  estate  is  situated 
in  the  United  States.  If  the  executor  is  unable  to  make  a 
complete  return  as  to  any  part  of  the  gross  estate  of  the 
dec^ent,  he  shall  include  in  his  return  a  description  of 
such  part  and  the  name  of  every  person  holding  a  legal  or 
beneficial  interest  therein,  and  upon  notice  from  the  col- 
lector such  person  shall  in  like  manner  make  a  return  as 
to  such  part  of  the  gross  estate.  The  Commissioner  of 
Internal  Revenue  shall  make  all  assessments  of  the  tax 
under  the  authority  of  existing  administrative  special  and 
general  provisions  of  law  relating  to  the  assessment  and 
collection  of  taxes. 

Sec.  206.  That  if  no  administration  is  granted  upon  the 
estate  of  a  decedent,  or  if  no  return  is  filed  as  provided  in 
section  two  hundred  and  five,  or  if  a  return  contains  a 
false  or  incorrect  statement  of  a  material  fact,  the  collector 
or  deputy  collector  shall  make  a  return  and  the  Commis- 
sioner of  Internal  Revenue  shall  assess  the  tax  thereon. 

Sec.  207.  That  the  executor  shall  pay  the  tax  to  the 
collector  or  deputy  collector.    If  for  any  reason  the  amoimt 


Executor's 
Notice  to 
Collector 


Return 


Contents 
of  Return 


When 

Return 

Required 


Return 
When  Made 
by  Collector 


Payment  of 
the  Tax 


14 


FEDERAL  ESTATE  TAX  LAW 


Refund  of 

Excess  Tax 
Payments 


Payment  of 
Balance  Due 


Duplicate 
Receipts 


Default  in 
Payment  of 
Tax 


Property  to 
Be  Sold  for 
Payment 
of  Tax  in 
Default 


Equitable 
Contribution 


of  the  tax  can  not  be  determined,  the  payment  of  a  sum 
of  money  suflBcient,  in  the  opinion  of  the  collector,  to  dis- 
charge the  tax  shall  be  deemed  payment  in  full  of  the  tax, 
except  as  in  this  section  otherwise  provided.  If  the 
amount  so  paid  exceeds  the  amount  of  the  tax  as  finally 
determined,  the  Commissioner  of  Internal  Revenue  shall 
refund  such  excess  to  the  executor.  If  the  amount  of  the 
tax  as  finally  determiued  exceeds  the  amount  so  paid  the 
commissioner  shall  notify  the  executor  of  the  amount  of 
such  excess.  From  the  time  of  such  notification  to  the 
time  of  the  final  payment  of  such  excess  part  of  the  tax, 
interest  shall  be  added  thereto  at  the  rate  of  ten  per 
centum  per  annum^  and  the  amount  of  such  excess  shall  be 
a  lien  upon  the  entire  gross  estate,  except  such  part  thereof 
as  may  have  been  sold  to  a  bona  fide  purchaser  for  a  fair 
consideration  in  money  or  money's  worth. 

The  collector  shall  grant  to  the  person  paying  the  tax 
dupUcate  receipts,  either  of  which  shall  be  sufficient  evi- 
dence of  such  payment,  and  shall  entitle  the  executor  to 
be  credited  and  allowed  the  amount  thereof  by  any  court 
having  jurisdiction  to  audit  or  settle  his  accounts. 

Sec.  208.  That  if  the  tax  herein  imposed  is  not  paid 
within  sixty  days  after  it  is  due,  the  collector  shall,  unless 
there  is  reasonable  cause  for  further  delay,  commence 
appropriate  proceedings  in  any  court  of  the  United  States, 
in  the  name  of  the  United  States,  to  subject  the  property  of 
the  decedent  to  be  sold  under  the  judgment  or  decree  of 
the  court.  From  the  proceeds  of  such  sale  the  amount  of 
the  tax,  together  with  the  costs  and  expenses  of  every 
description  to  be  allowed  by  the  court,  shall  be  first  paid, 
and  the  balance  shall  be  deposited  according  to  the  order 
of  the  court,  to  be  paid  under  its  direction  to  the  person 
entitled  thereto.  If  the  tax  or  any  part  thereof  is  paid 
by,  or  collected  out  of  that  part  of  the  estate  passing  to 
or  in  the  possession  of,  any  person  other  than  the  executor 
in  his  capacity  as  such,  such  person  shall  be  entitled  to 
reimbursement  out  of  any  part  of  the  estate  still  undis- 
tributed or  by  a  just  and  equitable  contribution  by  the 
Eersons  whose  interest  in  the  estate  of  the  decedent  would 
ave  been  reduced  if  the  tax  had  been  paid  before  the 
distribution  of  the  estate  or  whose  interest  is  subject  to 
equal  or  prior  liability  for  the  payment  of  taxes,  debts,  or 
other  charges  against  the  estate,  it  being  the  purpose  and 
intent  of  this  title  that  so  far  as  is  practicable  and  unless 


FEDERAL  ESTATE  TAX  LAW 


16 


otherwise  directed  by  the  will  of  the  decedent  the  tax  shall 
be  paid  out  of  the  estate  before  its  distnbution. 


Sec.  209.  That  unless  the  tax  is  sooner  paid  in  full,  it 
shall  be  a  lien  for  ten  years  upon  the  gross  estate  of  the 
decedent,  except  that  such  part  of  the  gross  estate  as  is 
used  for  the  payment  of  charges  against  the  estate  and 
expenses  of  its  administration,  allowed  by  any  court  having 
jurisdiction  thereof,  shall  be  divested  of  such  lien. 

If  the  decedent  makes  a  transfer  of,  or  creates  a  trust 
with  respect  to,  any  property  in  contemplation  of  or  in- 
tended to  take  effect  in  possession  or  enjoyment  at  or 
after  his  death  (except  in  the  case  of  a  bona  fide  sale  for  a 
fair  consideration  in  money  or  money's  worth)  and  if  the 
tax  in  respect  thereto  is  not  paid  when  due,  the  transferee 
or  trustee  shall  be  personally  liable  for  such  tax,  and  such 
property,  to  the  extent  of  the  decedent's  interest  therein  at 
the  time  of  such  transfer,  shall  be  subject  to  a  like  lien 
equal  to  the  amount  of  such  tax.  Any  part  of  such  prop- 
erty sold  by  such  transferee  or  trustee  to  a  bona  fide 
purchaser  for  a  fair  consideration  in  money  or  money's 
worth  shall  be  divested  of  the  lien  and  a  like  hen  shall  then 
attach  to  all  the  property  of  such  transferee  or  trustee, 
except  any  part  sold  to  a  bona  fide  purchaser  for  a  fair 
consideration  in  money  or  money's  worth. 


Tax  a  Lien 
for  Ten  Years 


When  Trans- 
feree  or 
Trustee 
Liable  for 
Payment  of 
Tax 


Sec.  210.  That  whoever  knowingly  makes  any  false 
statement  in  any  notice  or  return  required  to  be  filed  by 
this  title  shall  be  liable  to  a  penalty  of  not  exceeding 
$5,000,  or  imprisonment  not  exceeding  one  year,  or  both, 
in  the  discretion  of  the  court. 

Whoever  fails  to  comply  with  any  duty  imposed  upon 
him  bjr  section  two  hundred  and  five,  or,  having  in  his 
possession  or  control  any  record,  file,  or  paper,  containing 
or  supposed  to  contain  any  information  concerning  the 
estate  of  the  decedent,  fails  to  exhibit  the  same  upon 
request  to  the  Commissioner  of  Internal  Revenue  or  any 
collector  or  law  officer  of  the  United  States,  or  his  duly 
authorized  deputy  or  agent,  who  desires  to  examine  the 
same  in  the  performance  of  hjs  duties  under  this  title,  shall 
be  liable  to  a  penalty  of  not  exceeding  $500,  to  be  recov- 
ered, with  costs  of  suit,  in  a  civil  action  in  the  name  of 
the  tlnited  States. 


Penalty  for 

False 

Statement 


Penalty  for 
Failure  to 
Give  Notice 
of  Qualifying 
or  for  Failure 
to  Make 
Return 


16 


FEDERAL  ESTATE  TAX  LAW 


Laws  Made 
Applicable 
Bfereto 


Regulations 


Sec.  211.  That  all  administrative,  special,  and  general 
provisions  of  law,  including  the  laws  in  relation  to  the 
assessment  and  collection  of  taxes,  not  heretofore  specifi- 
cally repealed  are  hereby  made  to  apply  to  this  title  so 
far  as  applicable  and  not  inconsistent  with  its  provisions. 

Sec.  212.  That  the  Commissioner  of  Internal  Revenue, 
with  the  approval  of  the  Secretary  of  the  Treasury,  shall 
make  such  regulations,  and  prescribe  and  require  the  use 
of  such  books  and  forms,  as  he  may  deem  necessary  to 
carry  out  the  provisions  of  this  title. 


APPENDIX 


Federal  Estate  Tax  Law  Regulations 
and  Decisions 


Regulations  No.  37,  Governing  the  Collection  of  Estate 
Tax,  Under  the  Act  of  September  8,  1916 


Treasury  Department, 
Office  op  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  October  10,  1916. 

Transfer  of  Net  Estates  Taxable  where  Decedent 

Died  after  Sept.  8,  1916 

Article  I. — Title  II  of  the  revenue  act  of  September  8, 
1916,  levies  a  tax  upon  the  transfer  of  net  estates  of 
decedents  dying  after  the  passage  of  the  act — i.  e.,  on  or 
after  September  9,  1916 — whether  the  decedent  be  a  resi- 
dent or  a  nonresident  of  the  United  States. 

Territory  for  Tax  Levy,     United  States  Defined 

for  Purpose  of  This  Tax 

Art.  II. — The  United  States  is  defined  (section  200)  as 
including  continental  United  States,  Alaska,  and  Hawaii. 
The  tax  is  not  imposed  in  Porto  Rico  or  the  Philippine 
Islands,  but,  under  the  definition  of  the  title,  the  property 
in  the  United  States  of  deceased  residents  of  the  islands  is 
taxable  as  the  property  of  nonresidents. 

Exemption  of  $50,000  for  Estates  of  Residents 

Art.  III. — The  rates  of  tax  are  set  forth  in  section  201. 
In  the  case  of  the  estates  of  all  residents  an  exemption  of 
$50,000  is  allowed  in  determining  the  value  of  the  net 
estate.  But  in  the  case  of  nonresidents^  estates,  no  exemp- 
tion is  allowed,  the  only  deductions  from  the  gross  estate 
being  a  certain  proportion  of  such  charges  and  losses  as  are 
allowed  estates  of  residents.     (See  Article  IX.) 


1«  APPENDIX 

The  Gross  Estate 

Gix^s  Estate  Defined.     Property  in  Charge  of 
Executors 

Art.  IV. — The  gross  estate  of  a  decedent,  as  defined  in 
section  202,  includes; 

(1)  The  entire  estate  of  every  kind,  real,  personal,  and 
mixed,  tangible  and  intangible  property,  coming  into  the 
hands  of  executors  or  administrators,  or  such  as  would 
legally  come  into  their  charge  if  executors  or  administrators 
were  appointed,  and  which  property  would  be  subject  to 
charges  against  the  estate,  expenses  of  administration, 
and  distribution  to  the  heirs  or  legatees.  This  woula 
include  insurance,  not  payable  directly  to  a  beneficiary 
named  in  the  insurance  contract,  but  passing  as  a  part  of 
the  administered  estate.  It  would  include  also  the  good 
will  of  claimant's  business,  if  such  good  will  possessed  an 
actual  monetary  value. 

Property  Transferred  by  Deed  of  Trust,  Gift,  or 
Sale;  when  to  be  Included  in  Gross  Estate 

(2)  All  property  transferred  by  decedent  during  his 
lifetime,  but  in  contemplation  of,  or  intended  to  take 
effect,  at  his  death.  This  includes  not  only  property 
transferred  by  an  instrument  effecting  a  final  disposition 
of  the  transferor's  death,  but  transfers  of  anjr  kind,  includ- 
ing gifts  and  sales  that  were  not  bona  fide — -i.  e.,  made  for 
an  adequate  consideration  in  money  or  money's  worth — 
where  it  can  be  established  that  such  transfers  were  made 
in  contemplation  of  death.  The  law  provides  not  only 
that  all  such  transfers  of  any  portion  of  decedent's  prop- 
erty shall  be  included  in  the  gross  estate,  but  that  all  such 
transfers  of  material  value  made  within  two  years  prior  to 
death  shall  be  presumed  to  have  been  made  m  contempla- 
tion of  death,  and  the  burden  of  proving  that  they  were 
not  made  in  such  contemplation  and  securing  their  exemp- 
tion from  tax  is  placed  upon  the  beneficiary.  Wherever, 
therefore,  a  collector  or  agent  shall  have  knowledge  of  such 
a  gift,  "sale,"  or  other  transfer  he  shall  require  that  it  be 
returned  as  a  part  of  the  decedent's  gross  estate.  All 
executors  and  administrators  having  knowledge  of  such 
transfers  as  are  described  in  this  paragraph  are  required 
by  the  law  to  set  forth  the  facts  upon  their  return  of  the 
estate  (Form  706). 


APPENDIX  19 

Investigation  of  Transfers  Made  More  Than  Two 

Years  Prior  to  Decedent's  Death 

If,  in  the  case  of  transfers  made  more  than  two  years 
prior  to  decedent's  death,  the  executors  or  administrators 
shall  not  include  the  value  of  the  transfers  upon  the  return 
of  the  estate,  collectors  shall  not  add  such  value  to  the 
gross  estate  until  a  thorough  investigation  has  been  made, 
all  the  facts  have  been  ascertained,  and  the  collector  shall 
have  satisfied  himself  that  the  transfers  were  actually 
made  with  the  view  of  providing  for  the  beneficiary  after 
or  because  of  decedent's  death. 

''Material''   Transfers  Made  Within  Two  Years 

Prior  to  Death  Required  To  Be  Returned 

In  the  case  of  transfers  made  within  two  years  prior  to 
decedent's  death,  it  should  be  noted  that  if  such  transfers 
were  made  in  contemplation  of  death  they  are  to  be  in- 
cluded in  the  gross  estate  regardless  of  their  value.  It  is 
only  where  the  value  is  a  ''material  part"  of  decedent's 
whole  estate  that  the  presumption  is  that  they  were  made 
in  contemplation  of  death.  Where,  therefore,  an  executor 
has  made  return  and  the  collector  finds  that  transfers  of 
material  value  made  within  two  years  prior  to  decedent's 
death  have  been  omitted,  the  collector  shall  require  the 
executor  to  amend  the  return  by  including  such  transfers 
in  the  gross  estate,  unless  the  executor  shall  file  conclusive 
evidence  that  the  transfers  were  not  made  in  contempla- 
tion of  death. 

Property  Owned  Jointly 

(3)    Decedent's  share  in  joint  bank  accounts  or  in  any 
other  property  owned  by  decedent  jointly  with  another  or 
with  others  as  tenants  in  entirety.     Only  such  part  of  such  , 
property  as  can  be  shown  never  to  have  been  owned  by  the 
decedent  can  be  excluded  from  his  gross  estate. 

Gross  Estate  Where  There  Is  No  Executor 

Art.  V. — In  the  case  of  property  of  a  decedent  whose 
estate  has  no  executor  or  administrator,  all  the  property 
and  interests  of  the  decedent,  including  the  mterests 
described  in  paragraphs  2  and  3  above,  will  be  aggregated 
to  determine  the  gross  estate.     (See  Art.  XVII.) 


20  APPENDIX 

Situs  of  Stock,  Etc.,  Owned  by  a  Nonresident 

Art.  VI. — In  the  cases  of  nonresident  decedents,  stock 
owned  in  a  domestic  corporation  is  to  be  treated  as  a  part 
of  the  gross  estate  in  the  United  States,  Hawaii,  or  Alaska. 
Also  such  property  and  interests  of  a  nonresident  decedent 
as  are  described  in  paragraph  2  of  this  article  [Art.  IV.] 
are  to  be  treated  as  part  of  the  gross  estate  in  the  United 
States,  Hawaii,  and  Alaska,  if  their  situs  was  the  United 
States,  Hawaii,  and  Alaska,  either  at  the  time  of  making  a 
transfer  thereof,  or  at  the  time  of  decedent's  death. 

Income  and  Appreciation  To  Be  Included  in  the 
Gross  Estate 

Art.  yil. — Income  earned  during  the  settlement  of  the 
estate  (in  the  case  of  a  nonresident,  income  earned  on  the 
property  situated  in  the  United  States,  Hawaii,  and 
Alaska)  is  also  to  be  treated  as  a  part  of  the  gross  estate. 
Also,  any  appreciation  in  values  after  the  death  of  the 
decedent  and  prior  to  the  distribution  of  the  net  estate  is 
to  be  included  in  the  gross  estate  on  the  return,  since  the 
tax  attaches  upon  the  transfer  of  the  net  estate  and  losses 
sustained  during  administration  are  deductible. 

[Amended  by  Treasury  Decision  2j^6,  see  page  32] 

The  Net  Estate 

Residents^ Net  Estates — Deductions  From  the  Gross 
Estate — Funeral  Expenses,  Etc. 

Art.  VIII. — From  the  gross  estate,  determined  as  set 
forth  in  Articles  IV  to  VII  above,  certain  deductions  are 
allowable,  as  follows: 

In  the  cases  of  estates  of  residents: 

(1)  Funeral  expenses. 

(2)  Legitimate  administration  expense. 

(3)  Valid  claims  against  the  estate. 

Mortgages 

(4)  Mortgages  against  decedent's  property,  but  only 
such  mortgages  as  were  existent  and  unpaid  at  the  time  of 


APPENDIX  21 

decedent^s  death.  If  in  returning  the  gross  estate  only  the 
net  value  to  the  estate  of  the  mortgaged  property  is 
reported,  the  value  of  the  mortgages  can  not  be  deducted, 
as,  obviously,  this  would  effect  a  double  deduction. 

Losses 

(5)  Losses  of  the  estate  arising  during  the  legal  period 
of  administration  and  caused  by  fires,  storms,  shipwreck, 
or  other  unavoidable  accident,  or  by  theft.  Only  the  net 
loss,  after  all  compensations  from  insurance  or  otherwise 
have  been  credited  can  be  deducted. 

Support  of  Dependents 

(6)  Support  of  decedent's  dependents  during  the  legal 
period  of  administration.  This  can  not  be  an  arbitrary 
estimate,  but  must  be  limited  to  the  amount  actually  paid 
by  the  executors  or  administrators  to  such  persons  as  were 
dependent  upon  the  decedent  for  support  at  the  time  of 
decedent's  death. 

Other  Legal  Charges — Exemption  of  $50,000 

(7)  Such  other  legal  charges  against  the  ^oss  estate 
as  may  be  allowed  in  a  court  of  competent  jurisdiction. 

(8)  The  specific  exemption  of  $50,000. 

Nonresidents'  Net  Estates 

Abt.  IX. — In  the  case  of  estates  of  nonresidents: 
(a)  From  the  gross  estate  situate  in  the  United  States, 
Alaska,  and  Hawaii,  determined  in  the  manner  set  forth 
in  Article  II,  there  may  be  deducted  a  proportionate  share 
of  all  the  expenses,  losses,  and  charges  enumerated  in 
items  1  to  7,  Article  VIII  above,  equal  to  the  share  the 
whole  gross  estate  in  the  United  States,  Alaska,  and  Hawaii 
is  of  the  entire  gross  estate  wherever  situated. 

Example :  If  the  total  gross  estate  wherever  situated  is 
$1,000,000,  and  the  share  in  the  United  States,  Alaska, 
and  Hawaii  is  $100,000,  and  if  the  total  of  legal  expenses, 
charges  and  losses  is  $50,000,  the  share  deductible  from  the 
gross  estate  within  the  United  States,  etc.,  is  $5,000.  A 
synopsis  of  the  correct  return  would  read:  Gross  estate, 
$100,000;  legal  deductions,  $5,000;  net  estate,  $95,000; 
tax  due,  $1,400. 


22  APPENDIX 

No  Exemption  for  NonresidenU 

(b)  The  exemption  of  $50,000  to  be  taken  in  determin- 
ing the  net  estates  of  residents  does  not  apply,  and  no  part 
of  it  applies,  to  the  estate  of  a  nonresident. 


No  Deductions  for  Nonresidents  if  Return  Is 
Incomplete 

(c)  Furthermore,  the  law  specifically  provides  (sec. 
203)  that  if  any  deductions  whatever  are  to  be  allowed  from 
the  gross  estate  of  a  nonresident  decedent,  the  return  filed 
by  the  executor  or  administrator  must  show  not  only  the 
value  of  the  gross  estate  situated  in  the  United  States, 
Hawaii,  and  Alaska,  but  also  the  value  of  all  the  property 
and  interests,  wherever  situated,  of  the  decedent. 


30-Day  Notice 

Abt.  X.— In  cases  of  estates  in  the  hands  of  executors 
and  administrators,  the  act  requires — 


Executors  To  File  Notice  of  Appointment 

(1)  That  within  30  days  after  the  issuance  by  the  court 
of  letters  testamentary  or  letters  of  administration  a  formal 
notice  of  such  issuance  be  filed  by  the  executors  or  adminis- 
trators with  the  collector  of  the  district  in  which  decedent 
was  a  resident  at  the  time  of  his  death.     (Form  704.) 


Other  Persons  Taking  Possession  of  Decedent's 
Property  To  File  Notice 

(2)  That  any  person  coming  into  possession,  prior  to 
the  issuance  of  letters  to  executors  or  administrators,  of 
any  property  of  the  decedent,  shall,  within  30  da^ys  from 
the  day  of  acquiring  possession,  file  a  similar  notice  with 
collector.     (Form  705.) 


APPENDIX  28 

Donees  and  Transferees — Similar  Notice 
Required 

(3)  The  law  contemplates  also  that  aU  persons  who 
shall  have  received  withmtwo  years  prior  to  the  death  of 
the  decedent  any  material  part  of  decedent's  property, 
either  as  a  gift  in  contemplation  of  death,  or  by  a  transfer 
intended  to  take  legal  effect  at  decedent's  death,  or  by  a 
so-called  sale  which  was  not  a  bona-fide  sale  for  a  fair  con- 
sideration in  money  or  money's  worth,  should  file  a  similar 
notice  with  the  collector  within  30  days  after  the  death  of 
decedent.  This  is  clearly  indicated  by  section  202,  para- 
graph B,  of  the  act,  wherein,  for  the  purpose  of  tax  liability, 
such  gifts,  transfers,  and  "sales"  are  held  effective  m 
every  case  as  of  the  day  of  the  donor's  or  transferor's 
death.  With  the  notice  to  the  collector,  the  donee  or 
transferee  may  file  such  evidence  as  may  be  desired  to 
establish  whether  the  gift  or  transfer  was  in  contemplation 
of,  or  intended  to  take  effect  at,  the  donor's  or  transferor's 
death,  or  whether  the  sale  was  bona  fide.     (Form  705.) 

Duty  of  Beneficiaries  Where  There  Is  No  Executor 

(4)  In  the  cases  of  estates  where  no  executors  or  ad- 
ministrators come  at  any  time  into  charge  of  the  property, 
the  burden  of  filing  the  30-day  notice  is  placed  by  the  law 
upon  the  individual  beneficiaries.  Each  such  beneficiarj' 
having  reason  to  believe  that  the  total  property  of  the 
decedent  exceeds  the  gross  value  of  $60,000  or  the  net  value 
of  $50,000,  must  file  the  30-<lay  notice  with  the  collector 
within  30  days  after  coming  into  possession  of  any  portion 
of  the  property.     (Form  705.) 


Where  Notice  for  Nonresidents'  Estates  Shall  Be 
Filed 

Art.  XI. — In  the  cases  of  the  estates  of  nonresidents  the 
above  set  forth  requirements  apply  fully,  except  that  the 
collector  with  whom  any  notice  is  to  be  filed  is  the  collector 
in  whose  district  the  property  liable  for  the  tax  is  situated. 
If  such  property  is  located  in  more  than  one  district  the 
notice  is  to  be  filed  with  the  collector  at  Baltimore,  Md. 


24  APPENDIX 

Collectors  to  Inform  Executors  as  to  Beneficiaries 

Art.  XII. — Whenever  a  collector,  in  the  case  of  a  given 
estate,  receives  the  notice  from  a  beneficiary  and  there  are 
executors  or  administrators  acting,  he  shall  promptly  in- 
form the  executors  or  administrators  of  the  beneficiary's 
name  and  address,  in  order  that  the  executor  or  adminis- 
trator, in  compliance  with  the  provisions  of  section  205, 
may  ascertain  such  facts  with  regard  to  the  property  pos- 
sessed by  the  beneficiary  as  the  executor  or  administrator  is 
required  to  show  upon  his  return. 


Forms  for  Giving  Notice 

Executors  or  administrators  will  render  this  notice  on 
Form  704.  Beneficiaries  will  render  the  notice  on  Form 
705. 


The  Return 

Return  to  Be  Made  Within  One  Year  After  De- 
cedent^s  Death — Tentative  Return  May  Be  Made 

Art.  XIII. — ^A  return  of  the  gross  and  net  estate  must 
be  filed  with  the  collector  by  the  executor  or  administrator 
within  one  year  after  decedent's  death  and  before  distribu- 
tion or  tax  payment  is  made.  The  return  must  be  upon 
Form  706  and  all  information  called  for  upon  the  blank 
return  must  be  given.  If  the  administration  of  the  estate 
is  in  such  incomplete  condition  that  correct  information  as 
to  the  value  of  the  net  estate  can  not  be  given,  a  tentative 
return  may  be  filed  showing  an  estimate  of  the  gross  and 
net  estate,  and  the  tax  due,  and  such  estimated  tax  may  be 
paid  at  the  time  the  return  is  filed.  The  return  must  be 
made  and  filed  with  the  collector  in  duplicate,  one  copy  to 
be  retained  by  the  collector  and  one  forwarded  by  him  to 
the  commissioner.  Where  a  tentative  return  has  been 
filed  a  final  and  complete  return  must  be  made  on  or  before 
the  date  of  final  payment  of  the  tax  in  full.  Wherever 
there  is  a  partial  payment  of  tax  in  advance  a  tentative 
return  must  be  filed  before  the  collector  will  accept  the 
partial  payment. 


APPENDIX  26 

When  Estates  of  Residents  Are  Not  Required  to 
File  Notice  or  Return 

Abt.  XIV. — In  the  case  of  the  estates  of  residents  neither 
the  30-day  notice  or  the  return  can  be  required,  except 
where  the  gross  estate,  as  defined  in  Articles  IV  to  VII  above, 
exceeds  $60,000,  or  the  net  estate,  computed  in  accordance 
with  Article  VIII  above,  exceeds  $50,000.  Wherever 
either  of  these  conditions  exists  the  30-day  notice  and  the 
return  must  be  filed. 

Every  Nonresident's  Estate  Liable  for  Notice  and 
Return 

Art.  XV. — The  return  is  required  of  the  estate  of  every 
nonresident  leaving  property  within  the  United  States, 
Alaska,  or  Hawaii,  regardless  of  the  amount  of  property  so 
left. 

When  Beneficiaries  Must  File  Notice  and  Return 

Art.  XVI. — In  the  case  of  estates  having  no  executors 
or  administrators,  or  where  any  part  of  the  gross  estate  as 
defined  in  Articles  IV  to  VII  above  passes  other  than  in  charge 
of  executors  or  administrators,  the  act  places  upon  the  separ- 
ate beneficiaries  the  precise  duties  with  regard  to  the  filing 
of  the  30-day  notice  and  the  return  and  the  payment  of 
tax  that  are  otherwise  imposed  on  the  executors  and 
administrators.  Each  such  beneficiary  is  as  fully  liable  to 
all  the  penalties  provided  in  the  act  as  is  the  executor  or 
the  administrator.  Where  the  property  is  held  for  the 
beneficiary  by  guardians,  trustees,  or  fiduciaries,  the  30- 
day  notice  and  the  return  may  be  executed  by  such  repre- 
sentatives of  the  beneficiary. 

Collector  to  Make  Final  Returns  Where  There  Is 

No  Executor 

Art.  XVII. — ^Each  beneficiary  making  return  for  any 
part  of  the  estate  tax  is  required  by  the  law  to  give  all  the 
mformation  possible  regarding  any  part  of  the  estate.  The 
final  and  complete  return,  in  cases  where  no  executor  or 
administrator  acts,  will  be  compiled  by  the  collector  from 
the  several  returns  of  the  individual  beneficiaries.     After 


26  APPENDIX 

having  determined  in  this  manner  the  total  gross  and  net 
estate,  the  rate  of  tax,  and  the  prop^^rtionate  amount  due 
from  each  beneficiary,  the  collector  shall  notify  each  bene- 
ficiary accordingly,  and  will  enter  upon  the  assessment  list 
the  amount  of  tax  apportionable  to  each. 


When  no  Return  or  When  False  Return  Is  Filed 

Abt.  XVIII. — Where  a  return  is  materially  false  or  in- 
correct, or  where  no  return  is  filed,  the  collector  or  his 
deputy,  after  investigation,  shall  make  the  return  and  the 
commissioner  shall  assess  tne  tax  thereupon. 

Cooperation  of  Collectors 

Abt.  XIX.— When  a  beneficiary  files  with  the  collector 
in  whose  district  he  resides  a  notice  of  the  receipt  of  prop- 
erty which  discloses  that  the  decedent  was  resident  at  the 
time  of  death  in  another  collection  district,  the  collector 
receiving  the  notice  shall  forward  it  to  the  proper  collector 
and  shall  promptly  inform  the  beneficiary  as  to  the  collec- 
tion district  in  which  return  is  required  to  be  made  and 
tax  paid. 

Where  Returns  of  Nonresidents' Estates  Are  To  Be 
Filed 

Abt.  XX. — In  the  cases  of  the  estates  of  nonresidents 
the  above  set  forth  requirements  apply  fully,  except  that 
the  collector  with  whom  the  notice  or  return  is  to  be  filed 
is  the  collector  in  whose  district  the  property  hable  for  the 
tax  is  situated.  If  such  property  is  located  in  more  than 
one  district,  the  notice  or  return  is  to  be  filed  with  the 
collector  at  Baltimore,  Md. 


Penalties 

Abt.  XXI. — ^Two  separate  penalties  are  provided 
connection  with  the  30-day  notice  and  the  return: 


APPENDIX  27 

Five  Thousand  Dollars  Penalty  for  False 
Statement 

(1)  For  a  false  statement  knowingly  made  in  a  notice 
or  return  the  penalty  is  a  fine  not  to  exceed  $5,000,  or 
imprisonment  not  exceeding  one  year,  or  both; 

Five  Hundred  Dollars  Penalty  for  Failure  to  File 

(2)  For  failure,  whether  through  neglect  or  otherwise, 
to  file  the  notice  or  the  return  at  the  times  required,  a 
penalty  of  not  exceeding  $500  to  be  recovered,  with  costs  of 
suit,  in  a  civil  action  in  the  name  of  the  United  States. 

Payment  of  Tax 

Tax  Due  One  Year  From  Day  of  Decedent's  Death 
— 5  Per  Cent,  Discount  for  Advance  Payment 

Art.  XXII. — Section  204  provides  that  the  tax  is  due 
and  payable  one  year  from  the  day  of  decedent^s  death. 
Discount  at  the  rate  of  5  per  cent,  per  annum  is  allowed  for 
avment  in  advance.  Thus,  if  the  tax  is  paid  two  months 
efore  the  due  date,  a  discount  of  one-sixth  of  5  per  cent, 
of  the  total  tax  shown  by  the  return  as  due  is  allowed. 

Suit  for  Taxes  60  Days  Overdue 

Art.  XXIII, — The  law  makes  two  provisions  with 
regard  to  taxes  delayed  in  pajonent  beyond  the  due  date: 

(1)  Where  the  delay  exceeds  60  days  beyond  the  due 
date,  if  the  collector  has  reason  to  believe  the  payment  is 
being  arbitrarily  withheld,  or  the  Government  is  in  danger 
of  loss  thereby,  he  shall  report  the  facts  to  the  commis- 
sioner, and  with  the  approval  of  the  commissioner,  he  shall 
then  proceed  in  accordance  with  section  208  to  report 
the  facts  to  the  United  States  attorney  in  order  that  action 
may  be  brought  to  subject  the  property  of  the  decedent  to 
be  sold  under  judgment  of  the  United  States  court. 

Interest  at  10  per  Cent,  or  6  per  Cent,  on  Tax  90 
Days  Overdue 

(2)  Where  the  tax  is  delayed  in  payment  more  than  90 
days  after  the  due  date  interest  begins  to  run  at  the  rate 
of  10  per  cent,  per  annum  and  is  computed  from  the  day  of 


E; 


28  APPENDIX 

the  decedent^s  death  to  the  day  of  pajmaent.  Provision 
is  made,  however,  that  if  after  investigation  the  collector 
determines  the  cause  of  the  delay  to  be  imavoidable, 
either  because  of  necessary  Utigation  or  other  condition 
beyond  the  control  of  those  responsible  for  the  payment  of 
the  tax,  and  the  true  tax  can  not,  therefore,  be  determined, 
the  interest  shall  be  at  the  rate  of  6  per  cent,  instead  of 
10  per  cent,  per  annum,  running,  nevertheless,  from  the 
date  of  decedent's  death. 


Duplicate  Receipt 

Art.  XXIV. — The  tax  may  be  paid  to  the  collector  or 
his  deputy.    The  collector  will  issue  a  receipt  in  duplicate. 

When  Advance  Payment  Relieves  From  Interest 

Abt.  XXV. — Where  prior  to  final  settlement  of  an  estate 
the  collector  has  accepted  a  tax  pajrment  which  he  deems 
sufficient  fully  to  cover  the  estate's  liability,  such  payment 
shall  reUeve  from  the  accruing  of  further  interest  imtil  such 
time,  if  ever,  as  it  may  be  determined  that  the  payment  was 
insufficient.  The  collector  shall  then  notify  the  persons 
liable  for  the  additional  tax,  and  interest  at  the  rate  of  10 
per  cent,  per  annum  shall  run  upon  the  due  tax  from  the 
date  of  the  collector's  notice  and  demand  until  the  date  of 
pa3anent  of  the  entire  additional  tax  due. 

Tax  To  Be  Paid  Before  Distribution  of  Estate 

Art.  XXVI. — It  is  provided  in  the  law  (see  sec.  208) 
that  in  every  case,  except  where  a  valid  will  of  a  testator 
provides  otherwise,  the  tax  shall  be  paid  from  the  corpus 
of  the  estate  by  the  executors  or  administrators  before 
distribution  to  beneficiaries  is  made. 

Lien  for  10  Years 

Art.  XXVII. — Any  unpaid  amount  of  tax  due  is  a  lien 
for  10  years  upon  all  the  property  of  the  decedent.  Under 
certain  conditions  outlined  in  the  section  209  the  lien  may 
attach  to  the  property  of  a  trustee  or  transferee  of  decedent. 


APPENDIX  29 


Administration  Provisions 
Powers  of  Investigation;  Collectors,  Agents,  Etc, 

Art.  XXVIII. — Under  section  210  of  the  act  the  com- 
missioner, or  any  collector  or  law  oflScer,  or  his  authorized 
deputy  or  agent,  has  authority  to  examine  any  record, 
file,  or  paper  containing,  or  supposed  by  the  oflficial  to  con- 
tain, any  information  concerning  the  estate  of  a  decedent. 
Refusal  to  exhibit,  upon  the  officiaFs  request,  any  such 
record,  file,  or  paper  renders  the  person  having  custody  of 
the  same  liable  to  a  penalty  of  not  exceeding  S500,  recover- 
able, with  costs,  in  a  civil  action  in  the  name  of  the  United 
States. 

Before,  however,  proceeding  to  report  any  such  case  to 
the  United  States  attorney,  the  collector  or  agent  should 
submit  all  the  facts  to  the  commissioner  for  advice. 


Assessment,  Etc, 

Abt.  XXIX. — The  present  regulations  No.  1  [general 
Internal  Revenue  regulations]  will  apply  to  methods  of 
assessment  and  collection  for  the  time  being  and  until 
experience  shall  have  demonstrated  whether  specific  rules 
for  the  assessment  and  collection  of  this  tax  are  required. 

Claims 

Art.  XXX. — The  present  regulations  regarding  abate- 
ment and  refund  claims  will  also  apply.  Attention  is  called, 
however,  to  the  provision  of  section  207^  that  where  a 
tentative  payment  of  tax  is  made,  sufficient  mthe  judgment 
of  the  collector  at  that  time  to  cover  all  tax  liability  of  the 
estate,  and  later  it  is  found  that  there  has  been  an  over- 
payment, refund  of  the  excess  shall  be  made.  This  would 
apply  regardless  of  whether  the  claim  were  filed  within  two 
years  of  date  of  tax  pajmaent. 

W.  H.  OSBORN, 

Commissioner  of  Internal  Revenue. 

Approved: 
Wm.  p.  Malburn, 
Acting  Secretary  of  the  Treasury 


30  APPENDIX 

(Treasury  Decision  2372) 
Notice  and  Return  by  Beneficiaries  Coming  into 
Possession  of  any  Property  of  a  Decedent,  where 
no  Executor  or  Administrator  of  the  Decedent's 
Property  is  Acting,  or  Prior  to  the  Appointment 
of  Executors  or  Administrators 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  September  25,  1916. 
To  Collectors  of  Ijjternal  Revenue: 

The  subjomed  extract  from  an  opinion  of  the  Solicitor  of 
Internal  Revenue,  dated  September  23,  1916,  is  published 
for  the  information  of  those  concerned. 

"The  said  law,  the  Revenue  Act  of  September  8,  1916, 
Section  200,  defines  the  term  *  Executor'  as  meaning  *the 
executor  or  administrator,  of  the  decedent,  or,  if  there  is 
no  executor  or  administrator  any  person  who  takes  posses- 
sion of  any  property  of  the  decedent.' 

"Section  205  requires  'that  the  executor,  within  30  days 
after  qualifying  as  such,  or  after  coming  into  possession 
of  any  property  of  the  decedent,  whichever  event  first 
occurs,  shall  give  written  notice  thereof  to  the  collector*; 
and  that  *the  executor  shall  also,  at  such  times  and  in  such 
maimer  as  may  be  required  by  the  regulations  made  under 
this  title,  file  with  the  collector  a  return  under  oath  in 
duplicate,  setting  forth  the  value  of  the  gross  estate,'  etc. 

"Manifestly  the  purpose  of  the  law  is  to  secure  such 
information  and  returns  as  will  enable  the  Government  to 
properly  execute  the  law  and  collect  such  taxes  as  may  be 
thereby  imposed. 

"In  view  of  this  uniform  interpretation  as  to  the 
requirement  of  notice  and  returns  in  all  matters  of  revenue 
taxation,  as  well  as  the  specific  language  of  the  law,  I  am 
of  the  opinion  that  you  are  justified  m  the  preparation 
of  regulations  requiring  persons  who  come  into  possession 
of  the  property  of  a  decedent,  or  anv  part  thereof,  prior 
to  the  appointment  of  executors  or  admmistrators,  to  give 
due  and  proper  notice  to  the  collector  of  that  fact.  '\^lien 
executors  or  administrators  are  appointed  they,  of  course, 
supersede  all  other  persons  in  the  control  of  the  property 
whether  such  persons  are  in  possession  or  not,  and  the 
duty  of  giving  notice  and  making  returns  for  the  entire 
estate  immediately  devolves  upon  such  executors  or 
administrators." 


APPENDIX 

{Treasury  Decision  2385) 
Taxable  Transfers 

Treasuky  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  October  21,  1916. 
Sir: 

Replying  to  the  inquiry  in  your  letter  of  the  10th  in- 
stant, you  are  informed  that  Paragraph  B  of  Section  202, 
Title  II,  of  the  Act  of  September  8,  1916.  provides  for  the 
inclusion  in  the  gross  estate  of  a  decedent  dying  on  or 
after  September  9,  1916,  of  any  interest  of  which  the  de- 
cedent **has,  at  any  Umey  made  a  transfer"  in  contempla- 
tion of,  or  intended  to  take  effect  at  or  after,  decedent's 
death. 

This  language  is  so  specific  that  it  hardly  would  seem 
open  to  question  that  Congress  intended  to  include  in  the 
gross  estate,  not  only  such  transfers  including  gifts  and 
sales  not  bona  fide  made  by  instrument  dated  after  Sep- 
tember 8,  1916,  or  where  the  actual  transfer  took  place 
after  that  date,  but  transfers  of  any  kind  made  in  contem- 

Elation  of  death  at  any  time  whatsoever  prior  to  Septem- 
er  8, 1916.  It  is  believed  also  that  there  is  no  question  of 
the  power  of  Congress  to  enact  such  revenue  legislation. 
The  test  of  the  tax  liability  is  not  in  such  cases  the  date  of 
the  instrument  making  the  transfer,  or  the  date  of  the  act- 
ual transfer,  but  the  date  of  the  death  of  the  decedent. 

{Treasury  Decision  2395) 
State  Inheritance  Taxes 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue  , 
Washington,  D.  C,  November  17,  1916. 
Sir:        ^ 

Replying  to  your  letter  of  the  14th  instant  inquiring 
whether  state  inheritance  taxes  are  deductible  from  the 
gross  estate  of  a  decedent,  in  determining  the  federal  tax 
due  under  Title  II  of  the  Revenue  Act  of  September  8, 
1916,  you  are  informed  that  among  the  deductions  from 
the  gross  estate  specified  in  Section  203.  Paragraph  a, 
Subparagraph  1,  of  the  above-mentioned  Act,  is  the  item 
**8uch  other  charges  against  the  estate,  as  are  allowed  by 
the  laws  of  the  jurisdiction,  whether  within  or  without  the 


32  APPENDIX 

United  States,  under  which  the  estate  is  being  adminis- 
tered." 

Since  it  does  not  appear  open  to  question  that  state 
inheritance  taxes  are  a  primary  charge  against  an  estate 
and  allowable  as  credits  to  executors  and  administrators 
in  every  state  imposing  such  taxes,  they  are  clearly  de- 
ductible from  the  gross  estate  ©f  the  decedent  whose  prop- 
erty and  interests  are  liable  to  the  federal  tax  imposed  in 
Title  II  of  the  Act  of  September  8, 1916. 

{Treasury  Decision  2406) 
Income  Earned  after  Decedent's  Death  and  Ap- 
preciation in  Values  During  Administration 
are  not  to  be  Returned  as  a  Portion  of 
the  Gross  Estate 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  December  2,  1916. 
Sir: 

Replying  further  to  your  letter  of  October  26, 1916,  you 
are  informed  that  Art.  VII  of  Regulations  37  has  been  re- 
considered and  in  view  of  an  opinion  of  the  Solicitor  of 
Internal  Revenue  dated  November  9th,  sustained  in  an 
opinion  of  the  Attorney  General  of  November  29th,  it  is 
held  that,  for  the  purpose  of  tax  under  Title  II  of  the 
Revenue  Act,  of  September  8,  1916,  the  gross  estate  of  a 
decedent  must  be  based  upon  the  value  of  the  property  at 
the  time  of  decedent's  death,  and  income  earned  after 
death  and  appreciation  in  values  during  administration 
shall  be  not  returned  for  estate  tax. 

{Treasury  Decision  2415) 

Conditions  Under  Which  Tentative  Return  may 

be  Filed  and  Advance  Tax  Payment  Accepted 

Treasury  Department, 
Office  of  Commissioner  op  Internal  Revenue, 
Washington,  D.  C,  December  14,  1916. 
Sm: 

Receipt  is  acknowledged  of  your  report  of  the  7th  instant 
with  regard  to  the  liability  to  estate  tax  of  the  estate  of 

You   make   specific   inquiry  with 

regard  to  the  allowance  of  certain  estimated  deductions 


APPENDIX  33 

from  the  gross  estate  which  were  shown  by  the  executor 
upon  his  preliminary  return. 

Section  204  of  the  taxing  act,  in  which  provision  is 
made  for  the  allowance  of  a  discount  of  5  per  cent,  for 
payment  of  tax  before  the  expiration  of  one  year  from 
the  death  of  the  decedent,  does  not,  of  course,  contemplate 
that,  in  order  to  take  advantage  of  this  discount,  executors 
shall  be  permitted  to  make  vague  and  inaccurate  estimates 
of  the  value  of  the  gross  estate,  or  the  extent  of  the  legal 
deductions  therefrom.  If  executors  were  permitted  to 
make  returns  which  were  mere  estimates  it  is  obvious  that 
they  might  oftentimes  estimate  the  gross  estate  conserva- 
tively and  estimate  the  deductions  generously,  or,  at  least, 
it  could  not  be  assumed  that  this  had  not  been  done,  and 
it  would,  therefore,  be  necessary  that  in  every  case,  after 
the  final  accounting  of  the  executors,  the  Government 
should  make  a  supplementary  investigation  to  determine 
the  true  facts,  since  in  the  majority  of  the  cases  it  would  be 
probable  that  the  tax  had  been  underpaid  in  the  first  in- 
stance. 

Section  205  provides  for  the  filing  of  the  return  at 
such  times  and  in  such  manner  as  may  be  required 
under  the  regulations  promulgated  by  the  Commissioner 
of  Internal  Revenue,  with  the  approval  of  the  Secretary 
of  the  Treasury,  and  it  is  obvious  that  the  proper  time  for 
return  to  be  made  is  a  time  coincident,  as  nearly  as  possi- 
ble, with  the  final  settlement  of  the  estate  ana  the  date 
upon  which  the  estate  tax  is  due.  Since  in  many  States 
more  than  a  year  from  the  decedent's  death  is  allowed  for 
administration,  the  time  set  by  the  regulations  for  the 
filing  of  the  return  was  made  comcident  with  the  due  date 
of  the  tax — that  is,  one  year  after  decedent's  death. 

Section  207  of  the  act  relates  primilarly  to  the  pay- 
ment of  the  tax  and  not  to  the  filing  of  the  return,  and 
it  contemplates  that,  if  at  the  time  the  tax  is  due  it  is  im- 
possible, because  of  delay  in  administration,  for  an  exactly 
accurate  return  to  be  made,  a  tentative  return  may  be  filed 
and  tax  shown  thereon  to  be  due  may  be  tentatively  ac- 
cepted by  the  collector.  Neither  section  205  nor  section 
207  contemplates  that  at  any  time  return  may  be  filed 
and  tax  paid  without  a  reasonably  approximate  determin- 
ation of  the  facts  relating  to  the  gross  estate  and  the  sepa- 
rate legal  deductions. 

Therefore,  when  application  is  made  to  collectors  for 
authority  to^file^^returns  within  one  year  from  the  death  of 


34  APPENDIX 

the  decedent  whose  estate  is  being  returned,  collectors 
will  reguire  that  such  tentative  return  be  based  upon 
determined  or  accurately  determinable  values  of  gross 
estate  and  items  of  deductions,  and  if  the  estate  in  ques- 
tion has  not  reached  such  a  state  of  settlement  that  a 
reasonably  accurate  retiun  can  be  made,  advance  payment 
of  tax  will  not  be  accepted. 

(Treasury  Decision  2421) 
Thirty-day  Notice,  Return,  and  Tax  Payment  re- 
quired of  Representatives  in  this  Country  of  Non- 
residents where  no  Executor  Acts  Within  ike  Re- 
?uired  Time;  also  a  similar  Requirement  in  the 
'ase  of  Fiduciaries  holding  Property  of  a  Resident 
Where  no  Executor  Acts 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
iWashington,  D.  C,  December  22,  1916. 
To  Collectors  of  Internal  Revenue  and  Revenue 

Agents: 

Inquiry  has  been  made  of  this  office  as  to  the  liability 
under  Section  205  of  the  Revenue  Act  of  September  8, 
1916,  of  representatives  in  this  country  of  a  nonresident 
decedent  leaving  property  in  the  hands  of  the  representa- 
tives, and  where,  so  far  as  the  representatives  know,  no 
executor  has  been  appointed. 

Section  205  of  the  Act  requires  that  the  "executor" 
within  thirty  days  after  qualifying  as  such,  or  after  taking 
possession  of  any  property  of  decedent  whichever  event 
first  occurs,  shall  give  notice  to  the  proper  collector,  and 
that  later  the  "executor"  shall  file  return  of  the  estate. 
Section  207  requires  that  the  "executor"  shall  pay  the  tax 
to  the  proper  collector  or  his  deputy.  In  Section  200  the 
term  "executor,"  as  used  throughout  Title  II  is  defined 
as  meaning  either  the  executor  or  administrator,  or  if 
there  is  none,  "any  person  who  !takes_  possession  of  any 
property  of  the  decedent." 

In  the  instance  cited  to  this  office  for  ruling,  it  is  argued 
that  the  representatives  in  this  country  of  the  nonresident 
decedent  do  not  "take  possession"  of  decedent's  property, 
and  that,  since  the  representatives  are  neither  adminis- 
trators nor  beneficiaries,  they  can  not  be  required  to  file 
the  thirty-day  notice,  or  return,  or  make  pajnoaent  of  the 
tax. 


APPENDIX  35 

From  this  view  the  Government  must  dissent,  for  al- 
though there  is  no  change  of  agent  or  representative,  there 
is,  immediately  upon  the  nonresident's  death,  a  complete 
change  in  the  character  of  the  agency.  Prior  to  the  death, 
the  local  representatives  held  the  property  in  charge  for 
the  nonresident,  but  immediately  the  death  has  occurred, 
they  hold  subject  to  the  order  of  executors  or  adminis- 
trators, and  for  the  beneficiaries  legally  entitled  thereto. 
At  the  moment  of  death,  there  is,  on  the  part  of  the  local 
representatives,  an  actual  legal  taking  of  possession  for 
succeeding  owners;  a  change  in  the  conditions  of  possession 
so  complete  that  no  actuality  would  be  added  by  the  sub- 
stitution of  other  agents.  It  is  clear,  therefore,  that, 
under  the  provisions  of  Title  II,  such  representatives  are 
responsible  for  the  filing  of  the  thirty-day  notice  and  can 
be  saved  from  this  responsibility  only  if,  prior  to  the  ex- 
piration of  thirty  days  from  the  death  of  the  nonresident, 
the  required  notice  has  been  filed  by  the  executor  or  admin- 
istrator. 

Further  weight  is  §iven  to  this  ruling  by  a  consideration 
of  the  very  evident  mtent  of  Congress  in  its  definition  in 
Section  200  of  the  term  "executor."  This  definition  was 
given  with  the  sole  purpose  of  providing  effective  means  for 
the  ascertainment  and  collection  of  the  tax  due  in  every 
case  where  the  complete  facts  might  not  be  known  to  the 
executor  or  where  the  executor  might  be  in  a  position 
successfully  to  evade  his  responsibilities  under  the  taxing 
act.  Obviously,  the  object  on  the  part  of  Congress  in 
causing  "any  person  who  takes  possession  of  any  propertv 
of  the  decedent"  to  share  equally  with  executors  and  aci- 
ministrators  the  liability  to  render  notice  and  return  and 
pay  the  tax,  was  that  there  should  not  be,  under  any  cir- 
cumstances of  transmission,  a  failure  of  the  administrative 
power  to  secure  a  full  disclosure  of  the  facts  and  a  complete 
satisfaction  of  the  tax.  Congress  must  have  foreseen^  in 
enacting  the  final  paragraph  of  Section  202  that  with- 
out such  an  administrative  requirement  as  this,  the 
tax  due  because  of  stock  owned  by  a  nonresident  in  domes- 
tic corporations  could  be  successfully  evaded.  The  defi- 
nition of  '* executor"  in  Section  200  was  made  intentionally 
so  broad  that  no  property  subject  to  the  tax  could  escape 
taxation  through  any  uncertamty  as  to  the  person  liable 
for  giving  accurate  information  with  regard  thereto. 

The  thirty-day  notice  will,  therefore,  be  required  in 
every  case  of  such  representatives  in  the  United  States  of 


36  APPENDIX 

nonresident  decedents,  unless  the  representatives  know 
that  within  thirty  days  after  the  death  of  the  decedent 
the  executor  or  administrator  has  filed  the  notice.  Simi- 
larly, the  return  for  the  portion  of  the  estate  within  their 
charge  will  be  required  of  the  local  representatives  within 
one  year  from  the  death  of  the  decedent,  unless  the  local 
representatives,  piior  to  that  time,  have  ascertained  that 
the  executor  or  administrator  has  filed  the  return.  Simi- 
larly, tax  payment  will  be  required  of  the  representatives 
out  of  the  property  in  their  charge,  if  payment  has  not 
been  made  before  the  due  date  by  the  executor  or  adminis- 
trator. The  penalty  imposed  m  Section  210  for  failure 
to  fulfill  these  requirements  is  $500,  to  be  recovered  with 
costs  of  suit  in  a  civil  action. 

This  ruling  applies  also  with  regard  to  certain  property 
of  residents,  such  as  the  decedent's  interest  in  joint  oant 
accoiints  or  any  other  property  owned  jointly,  or  as  ten- 
ants in  entirety,  and  property  conveyed  by  deed  of  trust. 
In  such  cases,  the  fiduciary  holding  for  the  succeeding 
beneficiary  the  decedent's  share  of  the  joint  account,  or 
other  property  jointly  owned,  or  acting  as  trustee  of  prop- 
erty conveyed  to  beneficiaries  by  a  deed  of  trust,  is  re- 
quired to  file  the  thirty-day  notice  and  the  return  and  make 
tax  payment,  imless,  within  the  required  periods,  the  re- 
quirements of  the  law  have  been  otherwise  fully  satisfied. 

(Treasury  Decision  2449) 
The  Value  of  United  States  Bonds  can  not  be 
Excluded  from  the  Gross  or  Net  Estate  in  Deter- 
mining Estate  Tax  Due 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  February  13,  1917. 
Sir: 

Answering  the  question  presented  by  *  *  *  under 
date  of  the  10th  instant,  relative  to  the  liability  of  estates 
to  taxation  under  the  recent  Federal  Estate  Tax  Act,  it  is 
manifest  from  the  following  decisions  of  the  United  States 
Supreme  Court  that  U.  S.  Government  bonds  must  be 
added  to  the  value  of  estates  for  the  purpose  of  taxation 
imder  said  Act. 

The  U.  S.  Supreme  Court  in  Plummer  vs.  Coler  (178 
U.  S.  134),  considering  the  question  whether,  under  the 
inheritance  tax  laws  of  a  State,  a  tax  might  be  validly  im- 


APPENDIX  37 

posed  upon  a  legacy  consisting  of  United  States  bonds 
issued  under  a  statute  declaring  them  exempt  from  state 
taxation  in  any  form,  said: 

"We  think  the  conclusion,  fairly  to  be  drawn  from 
the  state  and  Federal  cases,  is,  thab  the  right  to  take 
property  by  will  or  descent  is  derived  from  and 
regulated  by  municipal  law;  that,  in  assessing  a  tax 
upon  such  right  or  privilege,  the  State  may  lawfully 
measure  or  fix  the  amount  of  the  tax  by  referring  to 
the  value  of  the  property  passing;  and  that  the  inci- 
dental fact  that  such  property  is  composed  wholly 
or  in  part,  of  Federal  securities,  does  not  invalidate 
the  tax  or  the  law  under  which  it  is  imposed." 

And  dealing  directly  with  the  power  of  the  Federal 
Government  under  the  Inheritance  Tax  Act  of  1898,  to 
impose  legacy  taxes  upon  the  transmission  of  an  estate 
consisting  of  "free-tax"  Government  bonds,  the  Court 
in  Murdock  vs.  Ward  (178  U.  S.  147),  referring  to  the  dis- 
cussion and  decision  in  the  Plummer  case,  held : 

"If  a  state  inheritance  law  can  validly  impose  a 
tax  measured  by  the  amount  or  value  of  the  legacy, 
even  if  that  amount  includes  United  States  bonds,  the 
reasoning  that  justifies  such  a  conclusion  must,  when 
applied  to  the  case  of  a  Federal  inheritance  law  taxing 
the  very  same  legacy,  bring  us  to  the  same  conclusion. 
We  must,  therefore,  hold  that  if,  as  held  in  Knowl- 
ton  vs.  Moore,  the  tax  imposed  under  the  Act  of 
June  13,  1898,  is  not  invalid  as  a  direct,  unappor- 
tioned  tax,  nor  for  want  of  uniformity,  nor  as  an 
infringement  upon  the  laws  of  the  states  regulating 
wills  and  descents,  then  the  tax  upon  legaciei  or  be- 
quests, descendible  under  and  regulated  by  state  laws, 
is  valid  even  if  such  legacies  incidentally  are  com- 
posed of  Federal  bonds." 

And  further,  in  Sherman  vs.  United  States  (178  U.  S. 
151 )  the  Court  said : 

"The  proposition  that  bonds  of  the  United  States 
and  the  income  therefrom  are  not  lawfully  taxable 
under  an  inheritance  tax  law  of  the  United  States, 
because  exempted  by  contract  from  such  tax,  has 
just  been  decided  not  to  be  well  founded,^[ 
This  is  clearly  conclusive  of  the  whole  question. 


38  APPENDIX 

(Treasury  Decision  2450) 
Method   of  [Determining   Share   in   Community 
Property  or  Property  Owned  Jointly  or  in  En- 
tirety^ to  be  Returned  as  a  Portion  of  the  Gross 
Estate  of  a  Decedent  Tenant 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue  , 
Washington,  D.  C,  February  14,  1917. 
Sir: 

Receipt  is  acknowledged  of  your  letter  of  the  6th  instant 
calling  attention  to  the  report  of  the  Revenue  Agent,  dated 
the  3rd  instant,  with  regard  to  the  liability  to  estate  tax  of 
the  estate  of    .    ,    . 

You  state  that,  under  the  Texas  law,  all  property  earned 
by  a  husband  or  wife  during  the  period  of  their  marriage  is 
community  property  and  owned  jointly.  The  death  of 
either  does  not  affect  the  interest  owned  by  the  survivor; 
that  is,  this  interest  does  not  pass  by  inheritance.    The 

Eublic  records  in  such  cases  may,  however,  be  misleading 
ecause  any  conveyance,  legally  made  to  both,  is  apt  to  be 
recorded  in  the  name  of  one,  usually  the  husband.  As  a 
matter  of  fact,  however,  there  is  a  legal  presumption  that 
the  whole  property  conveyed  to  either  is  community,  with- 
out reference  to  the  maimer  of  its  acquisition.  However, 
if  property  were  purchased  by  the  separate  means  or 
property  of  either,  or  were  received  by  either  as  an  inheri- 
tance, such  property  would  not  be  community,  but  would 
be  individual  property,  without  reference  to  the  maimer 
in  which  the  deed  of  conveyance  is  stated.  Notwith- 
standing this,  however,  under  the  presumption  of  the 
Texas  law,  it  would  have  to  be  considered  community  prop- 
erty until  facts  otherwise  were  developed. 

In  the  case  of  the  ....  estate,  the  Revenue 
Agent  reported  as  belonging  to  the  estate  of  the  deceased 
husband,  the  entire  property  which  the  public  records 
showed  as  in  his  name.  The  widow,  who  is  also  adminis- 
tratrix, stated  to  the  Agent  that  the  entire  property  so 
treatea  by  the  Agent  as  the  gross  estate  of  the  deceased 
husband  was,  in  fact,  community  property,  but  up  to  this 
time  she  has  submitted  no  evidence  substantiating  this  con- 
tention. While,  for  the  purposes  of  local  admimstration  a 
presumption  would  be  created  by  the  local  law  in  favor  of 
the  widow's  contention  in  this  case,  such  a  presumption 


APPENDIX  39 

does  not  rest  in  her  favor  so  far  as  any  responsibility  or  duty 
that  may  be  imposed  upon  her  by  Federal  Law  is  con- 
cerned. No  State  Statute  of  this  character  has  any  modi- 
fying effect  whatever  upon  the  explicit  terms  of  a  Federal 
Taxmg  Act.  The  Act  of  CJongress  of  September  8,  1916, 
creates  its  own  presumptions  and  defines  explicitly  the 
terms  under  which  exemption  from  tax  may  be  clauned. 
You  will  note  that,  under  Section  202,  Paragraph  C,  there 
is  required  to  be  included  in  the  gross  estate  of  a  decedent 
all  the  interest  held  jointly  or  as  tenants  in  the  entirety  by 
the  decedent  and  another  person,  * 'except  such  part  thereof 
as  may  be  shown  to  have  originally  belonged  to  such  other 
person  and  never  to  have  belonged  to  the  decedent."  Under 
this  paragraph  of  the  taxing  act,  wherever  the  public 
records  show  property  in  the  name  of  the  decedent,  the 
presumption  is  that  it  was  the  sole  property  of  the  decedent, 
and  the  burden  of  proving  that  another  person  owned, 
prior  to  the  decedent's  death,  any  interest  therein  is  not 
upon  the  Government,  but  is  upon  the  estate. 

You  will  note  the  extremely  limiting  terms  of  the  para- 
graph quoted  above  and  that  it  must  be  shown  that  any 
part  of  the  property  to  be  excluded  from  the  gross  estate 
actually  belonged  in  the  first  instance  to  a  person  other 
than  the  decedent  and  that  it  has  never  been  owned  by  the 
decedent.  If,  under  the  Texas  law,  property  conveyed  to 
a  husband  or  wife  during  their  marriage  is  taken  by  each 
in  entirety  and  in  such  a  manner  that  it  could  not  be  con- 
tended that  any  specific  part  belonged  to  either,  but  that 
each  was  the  owner  of  all,  and  upon  the  death  of  either  no 
new  interest  or  title  vested  in  the  survivor,  as  is  the  case  in 
some  states,  the  Government,  under  a  strict  and  technical 
interpretation  of  Paragraph  C  of  Section  202,  would  per- 
haps be  justified  in  demanding  that  the  whole  of  the  prop- 
erty thus  owned  be  included  as  a  portion  of  the  gross  estate 
of  the  decedent.  This,  however,  does  not  seem  to  have 
been  the  intent  of  Congress  and  it  has  heretofore  been 
ruled  in  a  similar  case  that  one-haK  of  the  property,  thus 
jointly  owned,  should  be  returned  as  a  portion  of  the  gross 
estate  of  the  decedent  husband  or  wife,  as  the  case  might 
be. 

In  the  case  of  the  ....  estate,  therefore,  you 
should  require  of  the  administratrix  in  due  time  the  return 
on  Form  706  and  therewith  may  be  submitted  any  evidence 
available  to  the  administratrix  to  establish  that  any  part  of 
the  property  included  in  the  gross  estate  was  actually  com- 


40  APPENDIX 

munity  property  of  the  decedent  and  his  wife  and  that, 
therefore,  but  one-half  thereof  is  to  be  treated  as  the  estate 
of  the  decedent. 


(Treasury  Decision  2453) 

The  Deductions  from  the  Gross  Estate  Provided 

in   Section   203,   Paragraph   i,   are  Limited   to 

Amounts  Allowed  Under  the  Laws  of  the  Local 

Jurisdiction 


Treasury    Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  7, 1917. 

SlRl 

Receipt  is  acknowledged  of  your  letter  of  the  third  in- 
stant quoting  Section  203,  paragraph  1,  of  the  estate  tax- 
ing act  and  inquiring  whether  the  phrase,  "such  other 
charges  against  the  estate  as  are  allowed  by  the  laws  of  the 
jurisdiction"  is  interpreted  by  the  Bureau  as  limiting  all 
the  preceding  clauses  of  the  paragraph;  that  is,  whether  any 
amounts  could  be  deducted  from  the  gross  estate  because 
of  funeral  expenses,  claims  against  the  estate,  losses,  etc., 
which  were  in  excess  of  the  amounts  allowable  under  the 
laws  of  the  local  jurisdiction. 

While  the  punctuation  and  construction  of  the  para- 
graph may  not  be  absolutely  conclusive  upon  this  point, 
it  is  the  opinion  of  this  office  that  the  Umitation  set  up  in 
the  concluding  part  of  the  paragraph  applies  to  all  the 
items  enumerated  in  the  paragraph;  that  is,  there  could 
not  be  deducted  from  the  gross  estate  in  determining  the 
net  estate  liable  to  tax  any  funeral  or  other  expenses,  or 
any  losses  and  charges  which  were  in  excess  of  the  amounts 
allowable  under  the  laws  of  the  local  jurisdiction  as 
credits  to  administrators  or  executors  in  their  accounts  in 
the  probate  courts. 

It  is  so  ruled. 


APPENDIX  41 

{Treasury  Decision  2454) 

Duties  of  HeirSf    Donees,  Trustees,    Fiduciaries, 

Tranrfer  Agents,  and  Others  Having  or  Coming 

into  Possession  of  Property  of  a  Decedent  Whose 

Estate  is  Liable  for  Estate  Tax, 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  February  28,  1917. 

Section  200  of  the  revenue  act  of  September  8,  1916, 
in  defining  the  term  "executor"  as  including,  "if  there  is 
no  executor  or  administrator,  any  person  who  takes  pos- 
session of  any  property  of  the  decedent,"  clearly  intended 
to  provide  that  wherever  circumstances  are  such  that  the 
Government  could  not  proceed  against  an  administrator 
or  executor  for  satisfaction  of  the  requirements  of  the 
taxing  act  there  shall  be  no  failure,  because  of  inability 
to  hold  others  in  possession  responsible,  to  collect  the  whole 
tax  due. 

Careful  consideration  has  been  given  in  the  light  of  this 
intent  of  Congress  to  the  problem  of  determining  how  far 
the  duties  of  filing  30-day  notice  and  return  and  making 
tax  payment  may  be  left  solely  to  duly  appointed  execu- 
tors or  administrators,  and  to  what  extent,  in  order  to 
insure  the  collection  of  tax  due,  others  in  possession  must 
be  required  to  assume  these  responsibihties.  As  a  result 
of  this  consideration  the  following  supplemental  regula- 
tions are  promulgated,  under  authority  of  section  212  of  the 
Act. 

Estates  of  Resident  Decedents 

Thirty  day  notice  (Form  705)  must  be  filed,  within  30 
days  after  death  of  the  decedent  whose  estate  is  taxable, 
by  others  than  executors  or  administrators,  as  follows: 

(1)  By  the  surviving  husband  or  wife,  as  the  case  may 
be,  for  one-half  the  value  at  the  decedent's  death,  of 
community  property  owned  by  the  decedent  and  the  sur- 
vivor. 

(2)  By  the  first  taker  after  the  decedent  of  any  of  de- 
cedent's real  property  where  this  passes,  in  accordance 
with  the  local  law,  directly  to  the  heirs  of  decedent. 

(3)  By  donees  who  have  received  within  two  years  prior 
to  the  decedent's  death  any  gift  of  material  value  from  the 
decedent,  or  who  have  received  at  any  time  whatever  gifts 


42  APPENDIX 

made  by  decedent  in  contemplation  of,  or  intended  to  take 
legal  effect  at,  death. 

(4)  By  trustees  holding  property  conveyed  dm-ing  life 
time  by  the  decedent  in  contemplation  of  'death  or  with 
intent  to  provide  for  others  than  decedent  at  or  after  de- 
cedent's death,  regardless  of  the  date  of  the  instrument 
maJdng  the  conveyance,  or  the  date  of  possession  by  the 
trustee,  or  the  date  of  vesting  of  the  right  of  survivors  to 
possession  or  enjo3anent  at  or  after  decedent's  death. 

(5)  By  fiduciaries  holding  property  of  any  kind  jointly 
or  in  entirety  for  the  decedent  and  another  or  others^    *^  ^ 

(6)  By  any  other  person,  persons,  joint-stock  com- 
panies, corporations,  or  associations  holding  at,  or  taking 
immediately  upon,  decedent's  death  any  property  inclusive 
in  the  ^oss  estate  imder  the  definition  of  section  202  of 
the  taxmg  act,  which  property  may  not  be  taken  in  charge 
by  decedent's  executors  or  administrators,  if  any. 

When  the  collector  of  internal  revenue  shall  receive 
Form  705^  filed  as  above  required,  he  shall  proceed  as 
indicated  m  Article  XII  of  regulations  No.  37.  If,  at  the 
expiration  of  one  year  from  decedent's  death,  it  has  not 
been  ascertained  that  an  administrator  or  executor  has 
been  appointed  for  the  decedent's  estate,  the  collector  will 
proceed  to  secure  return  and  tax  payment  from  the  bene- 
ficiary or  beneficiaries,  in  accordance  with  Article  XVI 
and  XVII  of  regulations  No.  37. 

Estates  of  Nonresident  Decedents 

The  30-day  notice  (Form  705)  is  required  to  be  filed  for 
all  property  of  every  kind,  located  or  legally  situate  in  this 
coimtry  (including  Hawaii  and  Alaska),  by  those  agents 
or  representatives,  donees,  transferees,  trustees,  or  fidu- 
ciaries of  a  decedent  dying  domiciled  abroad,  whether  alien 
or  citizen  of  the  United  States.  The  notice  must  be  filed 
within  30  days  from  decedent's  death  with  the  collector 
of  internal  revenue  in  whose  district  the  property  within 
this  country  is  situate,  unless  the  local  a^ent,  etc.,  having 
the  property  in  charge  knows  that  there  is  other  property 
of  decedent  located  in  another  collection  district,  m  which 
case  the  notice  is  to  be  filed  with  the  collector  of  internal 
revenue,  Baltimore^  Md. 

If  it  be  not  possible  for  the  local  agent,  representative, 
etc.,  to  file  the  notice  within  30  days  from  death  of  the  non- 
resident, the  penalty  denounced  in  section  210  will  not 
be  asserted  if  the  notice  lis  filed  within  30  days  from  the 


APPENDIX  43 

day  upon  which  the  local  agent,  representative,  etc.,  re- 
ceives information  of  the  nonresident  decedent's  death. 

Each  collector  receiving  Form  705  showing  property  of 
a  nonresident  will  immediately 'inform  the  commissioner 
of  the  fact.  A  record  will  be  kept  in  the  commissioner's 
oflBice  from  which  it  can  be  determined  whether  Forms  705 
for  a  given  estate  have  been  filed  in  more  than  one  collec- 
tion district,  in  which  case  the  several  collectors  will  be 
instructed  to  forward  the  Forms  705  to  the  collector  at 
Baltimore,  Md. 

In  due  time,  if  the  administrator  or  executor  of  the  non- 
resident decedent  has  failed  to  file  return  as  provided  in 
section  203,  paragraph  (b),  and  pay  the  tax  due,  the  col- 
lector shall  require  such  return  and  tax  payment  from  the 
local  agent,  representative,  etc.  No  deductions  what- 
ever from  the  gross  estate  will  be  allowed  in  such  a  case 
unless  all  the  property  of  the  nonresident  decedent  is 
shown  to  be  located  in  this  coimtry  and  it  is  established 
that  all  has  been  returned  for  estate  tax.  Where  there  is 
more  than  one  holder  in  this  country  of  decedent's  prop- 
erty, the  collector  will  aggregate  the  separate  returns, 
proceeding  in  accordance  with|Article  XVII  of  regulations 
No.  37. 

Under  no  circumstances  may  the  local  agent,  representa- 
tive, etc.,  release  to  a  foreign  administrator  or  executor 
or  a  foreign  beneficiary  of  the  decedent  any  property  with- 
in this  country  at  the  time  of  decedent's  death  until  either 
(1)  the  tax  due  because  thereof  has  been  paid  or  (2) 
ancillary  letters  have  been  taken  out  in  this  country  or 
otherwise  provision  has  been  made  by  the  estate  for  the 
satisfaction  of  the  tax  lien  resting  upon  the  decedent's 
property  in  this  country.  When  such  ancillary  letters 
have  been  taken  out  or  such  provision  has  been  made,  the 
local  agent,  representative,  etc.,  shall  immediately  inform 
the  collector  fully  as  to  the  facts. 

An  administrator  or  executor  acting  in  a  foreign  country 
will  not  be  recognized  as  believing  others  in  charge  or 
possession  of  a  decedent  s  property  from  responsibility  for 
satisfying  the  requirements  of  the  taxing  act  unless  and 
untiljie  has  made  return  and  tendered  payment  of  all  tax 
due.  The  penalty  denounced  in  section  210  of  the  act 
will  be  asserted  against  every  agent^  representative,  etc., 
in  this  country  releasing  to  a  foreign  administrator  or 
executor  or  beneficiary  of  the  decedent  the  property  within 


44  APPENDIX 

this  country,  except  where  the  requirements  of  this  regu- 
lation have  been  complied  with. 

The  above  regulation  fully  applies  to  transfer  agents  of 
corporate  stock  or  bonds,  receiving  into  possession  for 
transfer  purposes  such  personalty  of  a  nonresident  de- 
cedent. The  transfer  shall  not  be  effected  or  the  stock  or 
bonds  released  to  the  foreign  administrator  or  executor  or 
the  succeeding  beneficiary  until  the  transfer  agent  shall 
have  been  fully  assured  either  that  the  tax  due  has  been 
paid  or  that  ancillary  letters  have  been  taken  out  in  this 
country  or  provision  otherwise  made  for  the  satisfaction 
of  the  tax  lien  against  the  estate. 

This  ruling  applies  also  to  safe-deposit  companies,  ware- 
houses, and  similar  custodians  of  property  in  this  country 
of  a  nonresident  decedent,  to  brokers  holding  as  collateral 
securities  belonging  to  a  nonresident  decedent,  to  banking 
institutions  holding  money  of  nonresident  decedents  on 
deposit  or  for  any  specific  purpose,  such  as  the  purchase  of 
goods,  so  long  as  the  title  rests  in  the  nonresident  decedent, 
his  estate  or  his  heirs,  and  to  debtors  in  this  country  of  non- 
resident decedents. 

It  does  not  apply  to  carriers  of  property  of  a  nonresident 
decedent  while  such  property  is  in  their  charge  for  the  pur- 
pose of  transit. 

Form  704  {Thirty-Day  Notice)  is  for  Exclusive 

Use  of  Executors  or  Administrators 

Repljdng  to  your  letter  of  the  14th  instant,  you  are  in- 
formed that  the  mimeograph  letter  of  February  6,  1917, 
published  on  page  36  of  your  War  Tax  Service  is  in  error  in 
stating  that  beneficiaries  should  file  Form  704.  The 
proper  form  is,  of  course,  705,  Form  704  being  for  the  ex- 
clusive use  of  executors  or  administrators. 


Claims  for  Refund  and  Abatement  of  Taxes 

Revised  Statutes,  Sec.  3220 

The  Commissioner  of  Internal  Revenue,  subject  to 
regulations  prescribed  by  the  Secretary  of  the  Treasury,  is 
authorized,  on  appeal  to  him  made,  to  remit,  refund,  and 
pay  back  all  taxes  erroneously  or  illegally  assessed  or 


APPENDIX  45 

collected,  all  penalties  collected  without  authority,  and  all 
taxes  that  appear  to  be  unjustly  assessed  or  excessive 
in  amount,  or  in  any  manner  wrongfully  collected;  also  to 
repay  to  any  collector  or  deputy  collector  the  full  amount 
of  such  sums  of  money  as  may  be  recovered  against  him  in 
any  court  for  any  internal  taxes  collected  by  him,  with  the 
cost  and  expenses  of  suit;  also  all  damages  and  costs 
recovered  against  any  assessor,  assistant  assessor,  collector, 
deputy  collector,  or  inspector,  in  any  suit  brought  against 
him  by  reason  of  anything  done  in  the  due  performance  of 
his  official  duty;  Provided,  That  where  a  second  assess- 
ment is  made  in  case  of  a  list,  statement  or  return  which 
in  the  opinion  of  the  collector  or  deputy  collector  was 
false  or  fraudulent,  or  contained  any  understatement  or 
undervaluation,  such  assessment  shall  not  be  remitted  nor 
shall  taxes  collected  under  such  assessment  be  refunded  or 
paid  back,  unless  it  is  proved  that  said  list,  statement,  or 
return  was  not  false  or  fraudulent  and  did  not  contain  any 
understatement  or  undervaluation. 

Forms  46  and  47  on  Which  to  Present  Claims  for 
Refund  and  Abatement  of  Taxes 

Form  46 

Claims  for  the  refunding  of  assessed  taxes  and  penalties 
must  be  made  out  upon  Form  46.  In  this  case,  as  in  that 
of  claims  for  abatement  upon  Form  47,  the  burden  of  proof 
rests  upon  the  claimant.  All  the  facts  relied  upon  in 
support  of  the  claim  should  be  clearly  set  forth  under 
oath.  The  claim  should  be  stDl  further  supported  by  an 
affidavit  of  the  deputy  collector  of  the  proper  division,  and 
by  the  certificate  of  the  collector.  (Extract  from  Regula- 
tion No.  14,  Revised,  published  October  15,  1911.) 

Form  47 

Claims  for  abatement  of  taxes  or  penalties  erroneously 
or  illegally  assessed  or  which  are  abatable  under  remedial 
acts,  etc.,  must  be  made  out  upon  Form  47,  and  must  be 
sustained  by  the  affidavits  of  the  parties  against  whom  the 
taxes  were  assessed,  or  of  other  parties  cognizant  of  the 
facts,  and  must  be  accompanied  by  affidavits  of  the  deputy 
collectors  of  the  divisions  in  which  the  claims  arise. 
(Extract  from  Regulation  No.  14,  Revised,  published 
October  15,  1911.) 


Index 
Law,  Regulations  and  Decisions 

PAGE 

Administration  Expenses 12,  20 

Administrator,  Defined 9 

Advance  Payment 

Conditions  Under  Which  Accepted 32 

Discount  5% 12,  27 

When  Relieves  from  Interest 2S 

Appreciation 20,  32 

Assessment 13,  29 

Association,  Defined 9 

Beneficiaries 

Fiduciaries,  to  Make  Return  for 25,  34,  41 

Notice,  30-day,  Form  705 23,  30,  44 

Notice,  30-Day,  When  Required 13,  25,  41 

Return,  When  Required 13,  25,  41 

Bona  Fide  Purchaser,  Property  Sold  To.  13,  15,  23,  31 

Charges  Allowed  by  Court 12,  21,  40 

Claims  Against  Estate 12,  20 

Claims  For  Abatement  and  Refund 14,  29,  44,  45 

Collector 

Defined 9 

Notice  to  Collectors  of  Other  Districts 26 

Notice  to  Executor 24 

Returns  by 13,  25,  26 

Return,  in  what  District  to  be  Made 9,  26 

Commissioner  op  Internal  Revenue 

To  Assess  Tax 13,  14,  29 

To  Make  Regulations 16 

To  Prescribe  Forms 16 


48  INDEX 

PAGE 

Corporation,  Defined 9 

Contribution,  Equitable,  When  to  Be  Made 14 

Deductions 

Nonresidents,  Complete  Return 12,  21 

Residents 12,  20 

Default  in  Payment  of  Tax 14,  27 

Definitions 9 

Discount — 5%  For  Advance  Payment.  . . 12,  27,  32 

Donee,  Notice  to  Collector,  Form  705 23,  41,  44 

Estate  (See  Gross  Estate  and  Net  Estate) 

Subject  to  Tax 9,  17 

Excess  Tax  Payments,  Refund  of 14,  29 

Executor 

Defined 9,  30 

Duty  to  Report  Gifts 18,  31 

Notice  to  Collector,  Form  704 13,  22,  30,  44 

Return 13,  24 

Exemptions 

No  Specific  Exemption  to  Nonresidents 22 

Residents'  Specific  Exemption  $50,000 12,  17,  21 

Expenses 

Administration 12,  20 

Allowed  by  Court 12,  21,  40 

Funeral 12,  20 

False  Statements,  Penalty  For  Making 15,  27 

Forms 

To  Be  Prescribed  by  Commissioner  of  Internal 

Revenue 16 

704 — Executor's    and    Administrator's    30-Day 

Notice 22,  24,  44 

705— 30-Day  Notice  in  Other  Cases 22,  24,  44 

706— Return  of  Estate 24 


INDEX  49 

PAGE 

Funeral  Expenses 12,  20 

Government  Bonds 36 

Gross  Estate 

Appreciation 20,  32 

Goodwill 18 

Government  Bonds 36 

How  Determined 11,  18 

Income 20,  32 

Insurance 18 

Property  Held  Jointly  or  in  Entirety 11,  19,  38 

Property  in  Charge  of  Executor 11,  18 

Property  Transferred  in  Contemplation  of  Death 

11,  18,  31 

Stock  of  Nonresident 11,  20 

Where  No  Executor 19 

Income 20,  32 

Insurance 18 

Interest  on  Taxes 

6%  From  Date  of  Death 12,  27 

10%  From  Date  of  Death 12,  14,  27,  28 

When  Advance  Payment  Relieves 28 

Investigation  by  Government  Officers 15,  29 

Joint  Ownership 11,  19,  38 

Lien,  For  Taxes 15,  28 

Losses  From  Fire,  Storms,  Shipwreck,  Theft, 

Etc 12,21 

Mortgages,  Unpaid 12,  20 

Net  Estate 

Deductions  From  Gross  Estate 12,  20 

Exemption,  Specific 12,  18,  22 

How  Determined 12,  20,  21,  36 

Nonresidents 12,  21,  22 

Residents 12,  20 


50  INDEX 

PAGE 
NONKESIDENTS 

Deductions  Allowed 12,  21 

Imposition  of  Tax  Upon  Estate  of 9,  10,  17 

Net  Estate 12,  21,  22 

No  Specific  Exemption 22 

Notice,  30-Day 13,  22,  23,  24,  25,  34,  42,  44 

Return,  Where  Filed 9,  26 

Resident  Representative,   to   Give   Notice  and 

Make  Return 34,  42 

Situs  of  Stock  Owned  by 11,  20 

Notice 

Beneficiaries',  to  Collector 13,  23,  25,  30,  41,  44 

Collectors,  Notice  to  Executor 24 

Collectors,  Notice  to  other  Collectors 26 

Donee,  to  Collector 23,  41,  44 

Executors,  to  CoUector 13,  22,  30,  44 

Nonresident,  When  Required 25 

Nonresident,  Where  Filed 9,  23 

Penalty,  False  Statement 15,  27 

Penalty,  Failure  to  File 15,  27 

Person  in  Possession  of  Property, 

to  Collector 13,  22,  30,  41,  44 

Resident  Representative  of  Nonresident 34,  42 

Transferee,  to  Collector 23,  41,  44 

When  Notice  Not  Required 25 

Partnership,  Defined 9 

Payment 

Discount,  5%  For  Advance  Payment 12,  27,  32 

Due,  One  Year  From  Date  of  Death 12,  27 

Interest 12,  14,  27,  28 

Lien 15,28 

Receipts 14,  28 


INDEX  51 

PAGE 

Payment  (Continued) 

Resident   Representatives    Nonresident   Deced- 
ents  34,  42 

Suit,  Overdue  Taxes 14,  27 

Time,  before  Distribution 14,  28 

When  Advance  Payment  Relieves  From  Interest.        28 

Penalties 

Failure  to  File  Return  or  Notice 15,  27 

Failure  to  Give  Information 15,  29 

False  Statement,  Return  or  Notice 15,  27 

Nonpayment  of  Tax 12,  27 

Person,  Defined 9 

Property 

Date  of  Death  and  not  Transfer  Governs 31 

Held  Jointly  or  in  Entirety 11,  19,  38 

In  Charge  of  Executor 11,  18 

Included  in  Determining  Gross  Value  of  Estate. .  11,  18 

Intangible 11,  18 

Personal 11,  18- 

Real 11,  18 

Situs  of  Stock  Owned  by  Nonresident 11,  20 

Tangible 11,  18 

Transfer  of,  in  Contemplation  of  Death 11,  18,  31 

When  Sold  to  Bona  Fide  Purchaser 13,  15,  23,  31 

Rates  of  Tax 

Decedents  Dying  on  or  After  September  9,  1916 

and  Prior  to  March  3,  1917 9 

Decedents  Dying  on  or  After  March  3,  1917 10 

Receipts 14,  28 

Refund  of  Excess  Tax  Payments 14,  29 

Regulations    by    Commissioner    of    Internal 

Revenue 16 


52  INDEX 

PAGE 

Residents 

Deductions 12,  20,  40 

Exemption  Allowed 12,  17,  21 

Gross  Estate 11,  18 

Imposition  of  Tax  Upon  Estate  of 9,  11,  17 

Net  Estate 12,  20 

Returns 13,  24 

Resident  Representatives  of  Nonresident 
Decedents  to  Give  Notice  and  Make  Re- 
turns  34,  42 

Return 

Beneficiaries,  When  Required 25,  30,  41 

Collector,  Where  no  Executor  or  Administrator. .  13,  25 

Collector,  When  Return  False 13,  26 

Contents  of 13,  24 

Donees,  When  Required 23,  41 

Final 24,  25 

Fiduciaries 25,  41 

Form  706 24 

Nonresidents,  When  Required 13,  25 

Nonresidents,  Where  Filed 9,  26 

Penalty,  Failure  to  File 15,  27 

Penalty,  False  Statement 15,  27 

Resident  Representative  of  Nonresident 34,  42 

Residents,  When  Required 13,  24,  25 

Tentative  Return 24,  32 

When  Filed 24 

Where  to  be  Filed 9 

Sale  of  Property  For  Taxes 14,  27 

Suit  for  Taxes  Overdue 14,  27 

Support  of  Dependents 12,  21 


INDEX  53 

PAGE 

Taxes 

Assessment  of 13,  29 

Default  in  Payment 14,  27 

Discount  for  Advance  Payment 12,  27,  32 

Estates  Subject  to 9,  17 

Lien  on  Gross  Estate  for  10  Years 15,  28 

Penalty  for  Non-Payment 12,  27 

Property  to  be  Sold  for  Non-Payment 14,  27 

Rate 9,  10 

State  Inheritance  Taxes  Deductible 31 

When  Due 12,  27 

When  to  be  Paid 14,  28 

When  Fiduciary  Liable  for  Payment  of 25,  34,  41 

Theft,  Losses  Incukred  By 12,  21 

Transfers  In  Contemplation  of  Death 

Previous  to  Two  Years  Prior  to  Death.. .  .11,  18,  19,  31 
Within  Two  Years  Prior  to  Death 11,  18,  19 

Transferee 

30-Day  Notice  to  Collector 23,  41,  44 

When  Liable  for  Payment  of  Tax 41 

Trust 

Creation  of  in  Contemplation  of  Death 11,  18 

Trustee,  When  Liable  For  Payment  of  Tax  ...  34,  41 


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